PENALTY FOR CONTRACT VIOLATION (41)

Second Division Award No. 1803 (Carter)

"The record shows that claimants were working on regular assignments during the time the work was done. From this it is argued that they suffered no damage. If this be so, the carrier by reducing forces or refusing to employ an adequate number of employes could circumvent the agreement with impunity. It is the function of the organization to police the agreement and protect the contract rights of the employes it represents. When work is lost to the craft, a recovery for such lost work may be had. It may be that the claimants named would have been required to work overtime if the work had been given them or that, as here contended, they could not have performed it at all if they worked their regular assignments. But this does not excuse the contract violation. It is the carrier and not the organization that has the means to marshall its forces to avoid such contingencies. There can be only one recovery for the breach and it may not be defeated because carrier kept its employes working on other work during the time the contracted work was performed."

Third Division Award No. 11450 (Coburn)

"Carrier's defense that covered employes were not available to perform the work because of other assignments and thus suffered no damage does not shield it from liability under the Agreement. We concur in the reasoning and conclusions of Award No. 1803, Second Division, on this point..."

Third Division Award No. 11701 (Engelstein)

". . . It is not enough to recognize the breach without expecting the violator to accept the consequences for its act. We, therefore, cannot sustain Carrier's position that Claimant must show that he `was in some manner adversely affected by the action of the Carrier' for this factor is irrelevant an distracts attention from the real issue of the admitted violation of the Agreement. The argument that compensation to Claimant would be in the nature of a penalty is likewise extraneous, for it brushes aside the sanctity of the Agreement. . . ."

Third Division Award No. 11937 (Dorsey)

"Carrier confuses `damages' and `penalties.' While monetary `damages' awarded are sometimes loosely referred to as `penalties' the terms are technically distinct. Technically, in contract law, monetary `damages' make whole a person injured by violation of an agreement; `penalties' are the assessment of a fine over and above damages suffered. Monetary `penalties' are imposed as punishment for a violation of a contract with the objective of deterring like future conduct. . . ."

Third Division Award No. 12374 (Dolnick)

"A collective bargaining agreement is a joint undertaking of the parties with duties and responsibilities mutually assumed. Where one of the parties violates that Agreement a remedy necessarily must follow. To find that Carrier violated the Agreement and assess no penalty for that violation is an invitation to the Carrier to continue to refuse to observe its obligations. If Carrier's position is sustained it could continue to violate the Scope Rule and Article I of the Agreement with impunity as long as no signal employes were on furlough and all of them were actually at work. For economic or other reasons, Carrier could keep the Signalmen work force at a minimum and use employes not covered by the Signalmens' Agreement to perform signal work. No actual damages could ever be proved. This is not the intent of the parties nor the purpose of the Agreement."

Third Division Award No. 21751 (Caples)

"The Organization asserts Claimant under Rule 3 was entitled to perform the work in his seniority district. There is no evidence to the contrary as Carrier did not have the authority to transfer the work, as it contends. The Organization submits the proper remedy is to pay the Claimant the rate for the work performed citing many awards, essentially, assessing such a penalty for violation, citing, among other Third Division Award 685:

"`The Division xxx found that the Carrier made an improper assignment xxx. Accordingly, the claim, although it may be described as a penalty is meritorious and should be sustained. The Division quotes with approval this statement from the Report of the Emergency Board created by the President of the United States on February 8, 1937:

"`"The penalties for violations of rules seem harsh and there may be some difficulty in seeing what claim certain individuals have to the money to be paid in a concrete case. Yet experience has shown that if rules are to be effective, there must be adequate penalties for violation."'

"The Organization also cites, Third Division Award 20310."

Third Division Award No. 29232 (Fredenberger)

". . . We agree with the Organization that Claimants are due compensation despite the fact they worked and received compensation on the Claim dates. Claimants in fact did lose work opportunities due to the Carrier's violation of the Agreement, and this type of Claim long has been viewed as a proper device to police the Agreement."

Public Law Board No. 3994, Award No. 8 (Suntrup)

"Relief here is granted on principle that breach of contracts cannot be committed with impunity without `...expecting the violator to accept the consequences' (See Third Division 11701, 12374; PLB 3994, Award 7 inter alia).

"On the basis of the record as a whole the claim cannot be denied.

"The claim is sustained in full."

Public Law Board No. 3994, Award No. 7 (Suntrup)

"With respect to relief, argument by the Carrier is that even if a violation may have occured (sic) arguendo no compensatory relief is proper since the Claimant suffered no monetary loss. Such line of reasoning has been rejected by arbitral precedent in this industry and it would be improper for this Board to diverge from such precedent absent rationale other than that provided here by the Carrier. In prior cases before these parties this Board has cited Second Division 4506 and Third Division 11701 & 12374 and it incorporates them herein by reference. Likewise, a large number of other Awards issued particularly but not only by the Third Division of the National Railroad Adjustment Board underline that `it is not enough to recognize (a) breach (of contract) without expecting the violator to accept the consequences of its act' (See Third Division 11701; also 11937, 16946, 21340 inter alia). As Third Division 17108 puts it, which is an Award often cited with respect to the issue at bar: `...(a) violation of...contract is not limited to lost earnings of Claimants, but the loss of opportunities of earnings must also be considered...'.

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"The Claimant shall be paid one (1) per diem for each day he would have worked as Yardmaster at Ray Yard at Denison, Texas from December 5, 1989 through September 15, 1990 (or: through July 17, 1990 + 60 calendar days) at rate he would have received had he worked."

Third Division Award No. 29913 (Wesman)

"With respect to the Organization’s claim for monetary damages, Carrier asserts that such damages are inappropriate where Claimant was fully employed during the incident at issue. However, this Board concurs with Third Division Award 27614 as follows:

‘. . . While we recognize that there is a divergence of views on this subject, it is our view . . . that full employment of the Claimants is not a valid defense in a dispute such as involved here. As we noted in Third Division Award 26593, ". . . in order to provide for the enforcement of this agreement, the only way it can be effectively enforced is if a Claimant or Claimants be awarded damages even though there are no actual losses."’

"There is no showing on this record that an emergency existed, thus potentially mitigating Carrier’s responsibility to fully comply with Appendix No. 34. Accordingly, the Claim is sustained in its entirety."

Public Law Board No. 5189, Award No. 1 (Meyers)

"With respect to the remedy, this Board finds that the Claimant in this case was the regularly assigned yardmaster on the dates that the program instructions were changed. The Claimant was off duty and available to be called to perform the yardmaster work that was performed improperly by the trainmaster. If the Claimant had been called to perform the yardmaster work, he would have been paid at the rate of time and one-half. This Board must find that the Organization’s request that the Claimant be paid at the time and one-half rate be sustained."

Public Law Board No. 5189, Award No. 2 (Meyers)

"With respect to the remedy in this case, the Claimant was the regularly assigned yardmaster on the dates that the program instructions were changed in violation of the Agreement. The Claimant was off duty, rested, and available to be called into work as a yardmaster. Had he been called into work, he would have been paid time and one-half.

"Given the record before us, this Board has no choice but to sustain the claim."

Public Law Board No. 5189, Award No. 3 (Meyers)

"Under the most basic principles of contract law, which are used to, among other things, determine remedies when those are not specified in a contract, Claimant is entitled to relief because he was the person who should have been brought into work on the day at issue. The principles of contract law provide that an award of damages is intended to, as much as possible, put the injured person in the position that he or she would have been in had the contract been performed. Basic contract law therefore requires payment at the premium rate in this particular situation. There is no contract provision that prohibits it.

"If the Claimant had been called in on December 5, 1990, he would have been paid at the premium rate of pay for all hours that he would have worked that day. There is no dispute that the Claimant already had worked forty hours that week; the hours that the Claimant would have worked on December 5, 1990, would have been hours 41 through 50 for the week. The parties’ Agreement, as well as the federal law, requires that an employee be paid overtime pay, at the rate of time and one-half, for every hour over 40 hours worked during a week. The Claimant should have been called in to work on December 5, 1990, and if he had been, he would have been paid for the ten hours of work at the time and one-half rate. Accordingly, to be properly compensated for the Carrier’s mistaking in failing to call him in, the Claimant must be paid for ten hours of work at the premium rate."

Third Division Award No. 31752 (Mikrut)

"Given that we have found a violation of the Scope Rule, we next must consider whether an award of damages is appropriate in this instance.

"The Organization argues that the Third Division has repeatedly determined that it is invested with authority to award monetary damages even though the actual Claimants suffered no actual monetary loss.

"The Carrier argues that ample precedent exists which support its view that the Claimants mush suffer actual damages in order to be compensated in accordance with the claim otherwise, the Carrier is forced to pay a penalty payment authorized by the Agreement. In Third Division Award 26593, we pondered the divergent views of awarding damages to fully employed Claimants.

"'Having concluded that we have jurisdiction to consider the issue of damages, we must consider the carrier's argument that even if, assuming arguendo, the agreement was violated, claimant suffered no loss of earnings and therefore the Board has no authority to award damages.

"'On this issue, too, there are strong opposing views. Many awards support the proposition that even where there is a contract violation, the claim will not succeed unless there is a showing of actual loss of pay on the claimant's part. The opposing line of cases finds that to limit damages, in effect, gives a carrier a license to ignore the contract provisions.

"'A third viewpoint which has also been expressed is the conclusion that each case must be considered on its merits taking into consideration such factors as intent or motive on the part of the carrier.

"'We find, as did the Board in Third Division Award No. 23928, that to determine intent or motivation on the part of the carrier, would "only add a new element of uncertainty in the relationship of the parties" and require the Board to rest on that somewhat slippery slope of subjective considerations. We are of the view that a better purpose is served in the long run which clearly provides a guideline for the parties in the future. With that in mind, we have concluded that there is no prohibition from awarding damages where there is no actual loss of pay. That finding is based on our belief that in order to provide for the enforcement of this agreement, the only way it can be effectively enforced is if a claimant or claimants be awarded damages even though there are no actual losses.

"'Numerous other awards have reached the same conclusion, holding that where, as here, claimants by carrier's violation lost their rightful opportunity to perform work, they are entitled to a monetary claim. See Third Division Awards 21678, 19899, 19924, 20042, 20338, 20412, 20754, 20892. Accordingly, we will rule to sustain the claim in its entirety.'

"Applying the findings of Third Division Award 26593 establishing a monetary remedy for fully employed claimants alleging Scope Rule violations, we will sustain this claim in its entirety. We find as we did in Award 26593, that there is no prohibition from awarding damages where there is no actual loss of pay and that the only way the Scope Rule can be effectively enforced is to award damages even though there is no actual loss."