A recent decision from the First District Court of Appeal (Division Two) confirms that arbitrators have extremely broad authority to construe and interpret the meaning of labor contracts. The court acknowledged that arbitrators draw their power from the text of the parties’ agreement, but that in absence of a limiting clause, an arbitrator does not violate the contract if the remedy selected “bears a rational relationship to the underlying contract.” The court made clear that the arbitrator’s award is entitled to “deferential review.” With respect to a collective bargaining agreement (CBA), the fact that an arbitrator arguably misinterpreted the contract does not mean that he did not engage in the act of interpreting it. So far as the arbitrator’s decision concerns construction of the contract, the courts “have no business overruling him because their interpretation of the contract is different from his.” Moreover, “arbitrators are not obliged to read contracts literally, and an award may not be vacated merely because the court is unable to fine that the relief granted was authorized by a specific term of the contact.” The dispositive question, said the court, is where the remedy imposed by the arbitrator was arguably based on the contract or, stated otherwise, whether the award conflicts with express terms of the contract. The case is San Francisco Housing Authority v. SEIU Local 790. A copy is attached for your convenience.