

                United States Court of Appeals
                    For the First Circuit
                                         

No. 95-1794

                NORTH ADAMS REGIONAL HOSPITAL,

                     Plaintiff, Appellee,

                              v.

              MASSACHUSETTS NURSES ASSOCIATION,

                    Defendant, Appellant.

                                         

         APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS

        [Hon. Michael A. Ponsor, U.S. District Judge]                                                                
                                         

                            Before

           Selya, Boudin, and Lynch, Circuit Judges.                                                               

                                         

Fernand J. Dupere, Jr. for appellee.                                  

Alan  J. McDonald,  with whom  Jack  J.  Canzoneri and  McDonald &amp;                                                                              
Associates were on brief, for appellant.                  

                                         

                       January 24, 1996
                                         

          LYNCH,  Circuit  Judge.    When  the  North   Adams                      LYNCH,  Circuit  Judge.                                            

Regional Hospital was required by an  arbitrator, as a matter

of  contract  interpretation, to  hire  an  individual as  an

Emergency  Room  nurse whom  the  Hospital  considered to  be

unqualified, the Hospital  challenged the arbitrator's  award

in  federal court.   The  reviewing court  found against  the

Hospital on  the merits, but  also found the  Hospital's suit

was not "frivolous, unreasonable, or without foundation," nor

was  the suit "simply  a delaying tactic."   Accordingly, the

court  denied the  motion  for attorneys'  fees  made by  the

Massachusetts Nurses Association.  MNA has appealed, claiming

the  decision not to award  fees was an  abuse of discretion.

As it clearly was not, we reject the appeal and affirm.

          To state  the facts briefly:  In  1993 the Hospital

attempted to hire for a core Emergency Room nurse position an

external candidate who was better qualified than any internal

candidate.   MNA grieved and the arbitrator held that where a

"qualified"  internal candidate  was available,  the internal

candidate  must   be   hired   regardless   of   the   better

qualifications of the external candidate.  The crux, for this

appeal,  was in  the arbitrator's  finding that  the internal

candidate  was at  least "minimally  qualified" although  the

candidate  lacked  certification  in  Advanced  Cardiac  Life

Support ("ACLS"),  a  skill the  Hospital, not  unreasonably,

desired.  The arbitrator appeared to base this finding on the

testimony  of one witness, whom  the Hospital argued had said

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no such thing.  The parties have represented to us that there

was no transcript of the arbitration proceedings.

          The Hospital filed suit  in the U.S. District Court

challenging the  award.  Its essential argument  was that the

award  was  based on  a "non-fact"  and  was in  violation of

public policy.  But  for the gross factual error made  by the

arbitrator  as   to  whether   the  internal   candidate  was

qualified,  said the  Hospital, the  outcome would  have been

different.   The  Hospital  argued that  while  lack of  ACLS

qualifications might  be tolerable among  non-core staff,  it

was unacceptable for a  core-staff nurse -- who would  be for

some  periods the  person  with  primary  responsibility  for

Emergency  Room trauma and other cases -- not to be qualified

in advanced  cardiac life  support techniques.   The Hospital

argued  that the increased risk  to the health  and safety of

Emergency Room  patients should  lead to invalidation  of the

arbitrator's award on public policy grounds.   Faced with the

deference given by  law to arbitral awards and  the lack of a

transcript, the district court  rejected the challenge on the

merits.  The Hospital has not appealed.

          Nevertheless, MNA  has appealed, claiming  that the

district  court  was plainly  wrong  in not  awarding  it its

attorneys'  fees  and costs  arising  out  of the  Hospital's

challenge to the award.  MNA argues that  United Paperworkers                                                                         

Int'l Union v. Misco, Inc., 484 U.S. 29 (1987), so foreclosed                                      

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the  Hospital's  challenge   as  to   render  the   challenge

"unreasonable  and  without  foundation"  and   the  district

court's finding to the contrary to be an abuse of discretion.

MNA's position both misreads Misco and the decisions of  this                                              

court.

          This  court has  repeatedly held  that an  arbitral

award  may  be challenged  on a  showing  that the  award was

"mistakenly based on a  crucial assumption that is concededly

a non-fact."  Advest, Inc. v. McCarthy, 914  F.2d 6, 8-9 (1st                                                  

Cir. 1990) (emphasis added); see also Local 1445, United Food                                                                         

and Commercial Workers Int'l Union v. Stop &amp; Shop Cos., Inc.,                                                                        

776 F.2d 19, 21 (1st Cir. 1985); Trustees of  Boston Univ. v.                                                                      

Boston Univ. Chapter, Am. Ass'n of Univ. Professors, 746 F.2d                                                               

924, 926 (1st  Cir. 1984); Bettencourt v.  Boston Edison Co.,                                                                        

560  F.2d 1045, 1050 (1st  Cir. 1977).   The somewhat awkward

phrasing "non-fact" refers to  a situation "where the central

fact  underlying  an  arbitrator's  decision   is  concededly

erroneous," Electronics Corp.  of Am. v.  International Union                                                                         

of Electrical  Workers,  Local 272, 492 F.2d 1255,  1256 (1st                                              

Cir. 1974), that is, where  "there was a gross mistake .  . .

made out by  the evidence,  but for which,  according to  the

arbitrator's rationale, a  different result  would have  been

reached."     Id.  at   1257  (internal  quotation  omitted).                             

Prudential-Bache Sec., Inc. v.  Tanner, No. 95-1590, slip op.                                                  

at  6-7 (1st  Cir. Dec.  29, 1995),  recently  reaffirmed the

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principle.  The  Hospital's challenge to  a "non-fact" was  a

recognized ground to attack an arbitral award.

          MNA's argument  that in any event  the Hospital was

foreclosed from mounting a public policy argument under Misco                                                                         

is also without  merit.  Because the Hospital did not cite to

a  specific statute  or  case to  support its  precise public

policy argument,  the argument must be  deemed frivolous, the

MNA says.  There are three responses.

          First,  while Misco  did  discourage public  policy                                         

challenges  to  an  arbitrator's  award  based  on  "'general

considerations of supposed public interests,'" 484 U.S. at 43

(quoting  W.R. Grace &amp; Co.  v. Rubber Workers,  461 U.S. 757,                                                         

766  (1983)), it  reaffirmed that such  a challenge  could be

mounted  by  "ascertaining"  a  "well-defined  and  dominant"

policy  "'by reference  to the  laws and  legal precedents.'"

484 U.S. at 43 (quoting W.R. Grace, 461 U.S. at 766). Whether                                              

such a policy  may be  ascertained by reference  to laws  and

legal  precedents is  ultimately an  issue for the  courts to                                                                      

decide  on a challenge to an arbitral  award.  See Misco, 484                                                                    

U.S.  at  43.   Other courts  have  recognized that  a public

policy challenge may be based not directly on a specific rule

or regulation, but on the stated purpose behind such  statute

or  regulation.   See Exxon  Shipping Co.  v. Exxon  Seamen's                                                                         

Union, 993  F.2d 357, 364  (3d Cir. 1993).   It was  at least                 

arguable that there  is a public  policy in Massachusetts  to

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protect  patients  by requiring  nurses  to  be qualified,  a

policy established by the Massachusetts  regulations defining

the  general responsibilities  of  a registered  nurse.   See                                                                         

Brigham &amp; Women's Hosp. v. Massachusetts Nurses Ass'n, 684 F.                                                                 

Supp.  1120, 1125 (D.  Mass. 1988).   We need not  and do not

decide  whether such a policy exists,  but recognize that the

existence  of  the  argument supports  the  district  court's

finding  that the making of  the argument did  not justify an

award of attorneys' fees.  

          Second, MNA's  argument, whether meant  as such  or

not, comes  perilously close  to  inappropriately asking  the

court to evaluate  the competency of the  presentation of the

argument, rather than the merits of the argument itself,  for

the  purposes   of  imposition  of  attorneys'   fees.    Cf.                                                                         

Christiansburg  Garment Co.  v. Equal  Employment Opportunity                                                                         

Comm'n, 434 U.S.  412, 422 (1978) (attorneys' fees should not                  

be awarded  simply because,  in hindsight, the  claim appears                                                     

unreasonable).   The interests served by  the attorneys' fees

award rules are vastly different from those served by the law

governing attorney competence, in its various manifestations.

Cf. id.  (in deciding whether successful  Title VII defendant                   

can recover attorneys' fees,  court considers interests to be

served by doctrine).   Further, while it is true  that claims

may be dismissed, and the consequences visited on  the client

for the conduct of counsel, see  Link v. Wabash R.R. Co., 370                                                                    

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U.S.  626,  633  (1962), the  loss  of  one's  own claims  is

different  in kind  from being  penalized for  bringing those

claims in the first place.    

          Third, MNA's argument  does not serve  the purposes

of the award of attorneys' fees doctrine, which carves out an

exception to the usual  "American Rule".  Cf. Christiansburg,                                                                        

434  U.S.  at  422   (under  the  "American  Rule"  litigants

generally pay their own costs).  If a public policy challenge

to  an  arbitral  award proves  ultimately  to  be  weak, the

challenge  will lose on the merits.  That the challenge fails

is not  by itself a reason  to penalize the party  making the

challenge.   Such a rule would subvert the public interest in

allowing public policy challenges at all to arbitral awards. 

          The  evaluation   of  whether  such  a   claim  was

frivolous  at the  outset,  or when  continued, is  initially

committed to the  district court.  Our review is for abuse of

discretion  and MNA has not  come close to  showing an abuse.

Cf.  Local 285,  Service  Employees Int'l  Union v.  Nonotuck                                                                         

Resource Assoc., Inc.,  64 F.3d 735,  738-39 (1st Cir.  1995)                                 

(finding  no abuse of discretion in the refusal to award fees

in an argument presented  by the employer which was  weak but

arguable;  and an abuse of discretion in the refusal to award

fees  where  the  employer  presented a  type  of  procedural

argument clearly foreclosed by a long line of precedent).

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          The  decision  of the  district court  is affirmed.                                                                        

Costs to the Hospital.                                 

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