
USCA1 Opinion

	




                            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 &            _________________              ___________________      __________        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                                         -3-                                          3            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            ___________    ___________                                         -4-                                          4            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 & 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                                         -5-                                          5            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 & 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                                         -6-                                          6            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 & 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                                        ___  ____    _______________                                         -7-                                          7            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).                                         -8-                                          8                      The  decision  of the  district court  is affirmed.                                                                ________            Costs to the Hospital.            _____________________                                         -9-                                          9
