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Arbitration & Mediation
: Arbitration Law MemoArbitration Law Memo October 2009
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Arbitration Law Memo -
August 2009 |
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Arbitration - Individual Arbitration Agreements *** ·
MA
? Massachusetts Wage Act claims are arbitrable. ·
WV
- Arbitration agreement was valid contract of adhesion. ·
WA
- Arbitration agreement didn't apply to claim arising prior to employee's
term of employment. ***
Arbitration - Collective Bargaining Agreements *** ·
WA
- Court adopts "public policy exception" as a basis for vacating
grievance arbitration awards. ·
2nd
- Successor employer compelled to arbitrate (2-1). ·
CA
- Arbitrator, not trial court, to initially determine statutory preemption
of union's grievance. ·
2nd
- Trial court's decision that jurisdictional dispute was not arbitrable
upheld. ·
8th
- Employee's judgment against union for portion of arbitrator's award of
back pay reversed. ·
8th
- Common law claims were preempted and statutory claims were not under
section 301 of LMRA. ·
PA
- PLRB's interpretation of Section 805 of Public Employe Relations Act was
reasonable. ·
CA
- Amendment to Meyers-Milias-Brown Act may be applied to pending cases. ·
CT
- Arbitration award was ambiguous, precluding review on appeal. ·
9th
- Seamen's Wage Act claims are subject to arbitration. ·
MA
- Union entitled to presumption of arbitrability. ***
Arbitration - Individual Arbitration Agreements ***
9th
? Unconscionability was for the trial court to decide, notwithstanding
arbitration agreement?s provision to the contrary.
Jackson
v. Rent-A-Center (9th Cir 09/09/2009) Jackson sued the employer, asserting race discrimination and retaliation claims under 42 USC Section 1981. The trial court dismissed the claims and compelled arbitration. The 9th Circuit reversed. Jackson argued that the parties? arbitration agreement was unconscionable, and that the trial court should decide the issue in spite of the fact that the agreement assigned that task to the arbitrator. The trial court found that the issue was one for the arbitrator, but also found (as an alternative ground for dismissal) that the agreement was not unconscionable even if it were to decide the issue of unconscionability. The court disagreed with both of the trial court?s findings. The court stated, ?we hold that where a party specifically challenges arbitration provisions as unconscionable and hence invalid, whether the arbitration provisions are unconscionable is an issue for the court to determine, applying the relevant state contract law principles.? The court noted, ?[t]his rule applies even where the agreement?s express terms delegate that determination to the arbitrator.? The court thus concluded that the trial court erred in determining that an arbitrator should consider the issue of unconscionability. With respect to the trial court?s alternative ground for dismissal, the court concluded that the trial court erred in ignoring some of Jackson?s arguments regarding substantive arbitrability. 5th
? Employee?s state law claims relating to rape by co-workers didn?t
fall within scope of arbitration agreement.
Jones
v. Halliburton (5th Cir 09/16/2009) Jones sued the employer, asserting (among other things) a claim for sexual harassment under Title VII and state law claims for assault and battery, intentional infliction of emotional distress, negligent hiring/retention/supervision, and false imprisonment. Her claims arose from an alleged gang rape in her bedroom by fellow employees while working for the employer as a contractor in Iraq. The trial court denied the employer?s motion to compel arbitration of the above-described state law claims, and ordered the remaining claims to arbitration. The 5th Circuit affirmed, concluding that the state law claims did not fall within the scope of the parties? arbitration agreement. The court noted that ?[t]he case law is divided on the arbitrability, under similar arbitration clauses, of employees? claims premised on sexual assault.? The court agreed with the trial court that ?[p]laintiff?s bedroom should [not] be considered the workplace, even though her housing was provided by her employer.? WI
- Insurance agent's claim for termination commissions was subject to
arbitration; effect of a previous judgment to be decided by the
arbitrator.
Cirilli
v. Country Insurance (Wisconsin Ct App 10/28/2009) Cirilli sued the employer for insurance commissions allegedly unpaid at termination of his employment. The trial court denied the employer's motion to compel arbitration. The Wisconsin Court of Appeals reversed. (1) The court determined that Cirilli's claim fell within the scope of the employer's arbitration agreement. The court rejected the argument that the employer's release of any claims or defenses to non-payment of commissions, provided in a settlement and release resolving prior litigation, rendered the employer's arbitration agreement inapplicable. The court reasoned that determination of the issue whether the employer had released any claims or defenses "requires an analysis of the merits of the dispute, resolution of which is to be considered exclusively in arbitration." (2) Cirilli also asked the court to apply issue preclusion based on a litigation judgment (involving another plaintiff) which incorporated an arbitrator's finding that the releases barred all of the employer's defenses to payment of the termination commissions. The court held that the effect of the prior judgment went to the merits of the dispute, and is an issue to be decided in arbitration rather than by the court. TX
- Arbitration agreement with employee was enforceable after operating
agreement between management company and employer ended.
In
re Polymerica (Texas 10/23/2009) Employee Soltero sued the employer for wrongful discharge based on national origin and for retaliation for reporting sexual harassment. The trial court denied the employer's motion to compel arbitration. The Texas Court of Appeals granted mandamus relief for the time period a management company handled the employer's human resources department and denied relief otherwise. The Texas Supreme Court granted mandamus without limitations. Soltero signed a dispute resolution plan (DRP) and an employee handbook which required arbitration of all disputes with the management company and the employer. The employer ended its operating agreement with the management company before Soltero's discharge. The court distinguished In re Neutral Posture, Inc., 135 SW3d 725 (2003), (which the court of appeals relied on to order trial of claims post-dating the operating agreement) as requiring arbitration during a set five-year period, where the claim was filed after the expiration of the five years. The court stated in this case there was no time limitation in the DRP, nor was there a condition that the operating agreement must be in existence to enforce the DRP. MA ? Massachusetts Wage
Act claims are arbitrable.
Dixon
v. Perry & Slesnick (Massachusetts Ct App 09/28/2009) Dixon sued the employer, asserting (among other things) a Massachusetts Wage Act claim for unpaid wages. The trial court denied the employer?s motion to compel arbitration. The court reversed. As a matter of first impression, the court held that Wage Act claims are arbitrable. The court stated, ?[w]e discern nothing in the language of [G.L. c. 149] Section 148 or Section 150 that would lead us to conclude otherwise.? The court observed, ?[w]hile it does not appear that a reported Massachusetts case has ever considered whether an aggrieved party can be compelled to arbitrate a Wage Act claim, other statutory claims have been held to be subject to arbitration.? Noting that ?[the issue] whether a particular claim can be arbitrated is subject to a case-by-case analysis? the court determined ultimately that Dixon?s claim was subject to arbitration. WV
- Arbitration agreement was valid contract of adhesion.
State
ex rel Clites v. Clawges (West Virginia 10/13/2009) Clites sued the employer for violation of the West Virginia Human Rights Act (WVHRA) alleging sexual harassment and retaliatory discharge. The trial court granted the employer's motion for a stay pending arbitration. The West Virginia Supreme Court of Appeals affirmed, denying Clites' writ of prohibition. Acknowledging that the Federal Arbitration Act (FAA) preempts state law that would invalidate or undercut the enforceability of arbitration agreements, the court stated that the issue of whether an arbitration agreement was a valid contract was a matter of state contract law and capable of state judicial review. The court agreed with the trial court that the arbitration agreement was a contract of adhesion, finding that the agreement was boiler-plate language not subject to negotiation. Considering the record as a whole, including the employer's stipulation that the arbitration would take place in Clites' city of employment and that it would pay all costs of expenses that would not be incurred by Clites in court, the court did not find the arbitration agreement to be unconscionable. WA
- Arbitration agreement didn't apply to claim arising prior to employee's
term of employment.
Davis
v. General Dynamics Land Systems (Washington Ct App 10/13/2009) Davis sued the employer for race discrimination. Davis' claim arose from his term as a contract worker with the employer, prior to his date of employment. The trial court dismissed, based on an arbitration agreement signed by Davis when he was hired as an employee. The court reversed, concluding that the parties' arbitration agreement by its "plain terms" did not apply to claims arising prior to Davis' term of employment. ***
Arbitration - Collective Bargaining Agreements ***
US
- Supreme Court argument on whether courts can set aside final arbitration
awards by National Railroad Adjustment Board for alleged violations of due
process.
Union
Pacific v. Brotherhood of Locomotive Engineers (US Supreme Ct oral
argument 10/07/2009) Five employees of the Union Pacific Railroad filed claims through their Union (the Brotherhood of Locomotive Engineers and Trainmen) contesting a discharge or discipline imposed by the Railroad. Rather than resolving the dispute over the propriety of the discipline, the National Railroad Adjustment Board concluded that the Union had failed to submit conclusive evidence that the parties had held a conference to attempt to resolve the dispute - a procedural prerequisite to arbitration - and thus the Board determined that it was required to dismiss the claim for lack of jurisdiction. The district court agreed. The 7th Circuit reversed. Although the 7th Circuit agreed with the district court that it has always been clear that the parties must conference, and that they must submit evidence of that fact, it heretofore has not been clear when and how that evidence must be presented. The court found that the Board denied the Union due process by requiring evidence of conferencing to be presented in the on-property record, a requirement not clearly enunciated in the statutes, regulations, or the collective bargaining agreement of the parties. Consequently, the 7th Circuit reversed. The US Supreme Court granted certiorari to review the 7th Circuit judgment. WA
- Court adopts "public policy exception" as a basis for vacating
grievance arbitration awards.
Kitsap
Co Deputy Sheriff's Guild v. Kitsap Co (Washington 10/29/2009) The public employer appealed the trial court's decision declining to vacate a grievance arbitration award. The award reinstated a deputy discharged for alleged misconduct (including untruthfulness). The appellate court below reversed, based on its determination that the arbitration award violated public policy. The court reversed. The court had not yet explicitly adopted the public policy exception as a basis for vacating a grievance arbitration award. The court took that opportunity here, concluding "[w]e now join the federal and other state courts in adopting the narrow public policy exception to enforcing arbitration decisions." The court noted that several lower appellate court decisions have followed or made reference to the public policy exception. Applying that exception to the facts of this case, the court concluded ultimately that the arbitration award reinstating the deputy didn't violate an explicit, well defined, and dominant public policy. The court noted that "Washington statutes prohibit making false statements to a public officer but there is no statute or other explicit, well defined, and dominant expression of public policy that requires the automatic termination of an officer found to have been untruthful." Three DISSENTERS argued that the award did violate public policy. 2nd - Successor employer
compelled to arbitrate (2-1).
UFCW
v. Meridian (2nd Cir 10/02/2009) The union sued the successor employer seeking to compel arbitration under the terms of the collective bargaining agreement (CBA) with respect to contributions to the union's health and welfare fund. The trial court ordered the employer to arbitrate. The 2nd Circuit affirmed. The court stated the key factor in its analysis was not present in any of the prior jurisprudence on this subject: at all times from the time that the employees represented by the union began to work at the terminal (including when the prior employer was the employer of record), those employees were essentially working for the successor employer, which had the contract to clean the terminal; the successor employer retained the prior employer - a shop that employed union workers pursuant to an existing CBA - to do the successor's work. The court rejected the 3rd Circuit's analysis in AmeriSteel Corp. v International Brotherhood of Teamsters, 267 F3d 264 (2001), (holding AmeriSteel was not bound by the substantive terms of the CBA and no arbitration award could receive judicial sanction), because it eviscerated the protection of employees represented by incumbent unions. The court concluded that the trial court's order of arbitration was appropriate in this case in that it required the commencement of an arbitration that would decide two questions: first, the extent to which the successor employer was bound by the particular provisions of the CBA at issue, and second, if the successor employer was bound, then the nature of the relief available to the union. The DISSENT argued that the majority confused the circumstances in which a "successor employer" had a duty to recognize and bargain with a labor union, with the much more limited circumstances in which that employer was bound to arbitrate with a union under a CBA to which it had not agreed. CA
- Arbitrator, not trial court, to initially determine statutory preemption
of union's grievance.
United
Teachers v. Los Angeles School (California Ct App 09/17/2009) The union petitioned to compel arbitration with the employer for violation of the collective bargaining agreement (CBA) concerning charter school approval. The trial court denied the petition finding that the Ed Code section 47611.5, subdivision (e) preempted the CBA. The California Court of Appeal reversed. Section 47611.5, subdivision (e) provided that the approval of a charter school petition shall not be controlled by a CBA. The court stated, at this stage, its determination and that of the trial court was limited to whether there was a valid agreement to arbitrate. The court found that there was a valid CBA, that the merits of the dispute must be resolved in the first instance by the arbitrator, and that the arbitrator was authorized to resolve statutory claims. The court distinguished Board of Education v. Round Valley Teachers Assn., 13 Cal4th 269 (1996), as only holding that an arbitration award was subject to judicial review on preemption grounds because the arbitrator exceeded his powers, but did not address the issue of nor hold that a statutory defense was not subject, in the first instance, to arbitration. The court concluded that if the arbitrator decided that the employer violated the CBA. it could than challenge the award in the trial court based on its defense that section 47611.5, subdivision (e) preempted the union's grievance rights. 2nd
- Trial court's decision that jurisdictional dispute was not arbitrable
upheld.
CIEA
v. Laborers International Union (2nd Cir 09/11/2009) CIEA sought a stay of arbitration in a dispute arising under collective bargaining agreements (CBA) with two unions. The trial court stayed arbitration. The 2nd Circuit affirmed, finding a classic jurisdictional dispute between two unions seeking to perform the same work for an employer. The court concluded the laborers union had not performed caisson work when a job required the use of steel pipes. The court rejected the laborers union's argument that an arbitrator should decide the issue of arbitrability where the CBA lacked language indicating the parties agreed to settle disputes of arbitrability through arbitration. 8th
- Employee's judgment against union for portion of arbitrator's award of
back pay reversed.
Turner
v. United Steelworkers (8th Cir 09/11/2009) Turner sued the union seeking confirmation of an arbitrator's award for a portion of back pay allegedly imposed against the union. The trial court granted Turner's motion for summary judgment and granted judgment in the amount of $21,723.40 plus interest. The 8th Circuit reversed. Because the lengthy delay in moving the proceeding to arbitration was not the fault of the employer, the arbitrator's opinion stated that the employer "shall only be required to pay back pay from September 10, 2005 to the date she is reinstated. The Union shall be responsible for the back pay from January 21, 2005 through and including September 9, 2005." Considering that the collective bargaining agreement (CBA) and the issues submitted to the arbitrator did not contemplate a remedial claim against the union, the court reversed the monetary judgment, noting that a serious conflict of interest might result from imposing a monetary obligation on the union. 8th
- Common law claims were preempted and statutory claims were not under
section 301 of LMRA.
Williams
v. NFL (8th Cir 09/11/2009) Williams sued the employers' association (National Football League - NFL) alleging violations of Minnesota common law. The players association sued the NFL alleging breach of contract under section 301 of the Labor Management Relations Act (LMRA), asserting violation of Minnesota's Drug and Alcohol Testing in the Workplace Act (DATWA) and Minnesota's Consumable Products Act (CPA), and moving to vacate the arbitration award upholding Williams' suspension. The trial court ruled that (1) Minnesota's common law claims were preempted by section 301, (2) the Minnesota statutory claims were not preempted by section 301, and (3) the arbitration award was confirmed. The 8th Circuit affirmed, stating (1) the common law claims required examination of the collective bargaining agreement (CBA), (2) the DATWA and CPA statutory claims did not require examination of the CBA, and (3) the arguments for vacating the arbitration award were not sufficient to overcome the deference granted such awards. PA
- PLRB's interpretation of Section 805 of Public Employe Relations Act was
reasonable.
City
of Philadelphia v. Pennsylvania Labor Rel Bd (Pennsylvania Cmwlth Ct
10/20/2009) The union representing municipal guards and other correctional employees filed an unfair labor practice charge with the Pennsylvania Labor Relations Board (PLRB). The union alleged that the city committed an unfair labor practice by refusing to engage in interest arbitration pursuant to Section 805 of the Public Employe Relations Act (PERA). The PLRB issued an order directing the city to engage in interest arbitration. The court affirmed, on the basis that Section 805 is ambiguous and the PLRB "interpreted section 805 in a manner that fulfills its objective and ... is reasonable." NY
- Entire interest arbitration award is vacated due to error as to one part
which affected the entire award.
Buffalo
Firefighters v. Masiello (New York 10/15/2009) Following an interest arbitration between the firefighters union and the city, the Appellate Division concluded that the issue of health insurance was not an issue before the arbitration panel, because the parties had agreed that the City would withdraw its sole health insurance proposal from the panel's consideration. Thus, the Appellate Division appropriately vacated that part of the award. The New York Court of Appeals held that the entire arbitration award should be vacated, including the portion dealing with wages. This was because the arbitration panel did not consider the issue of wages in isolation, and the separate portions of the award were so interdependent that no part of it could be vacated without affecting the merits of the remainder. CA
- Amendment to Meyers-Milias-Brown Act may be applied to pending cases.
City
of San Jose v. IAFF (California Ct App 10/14/2009) California Senate Bill 1296 amended Government Code Section 3509 of the Meyers-Milias-Brown Act, such that "superior courts shall have exclusive jurisdiction over actions involving interest arbitration...when the action involves an employee organization that represents firefighters, as defined in Section 3251." The court held that this amendment is "properly characterized as procedural" and may be applied to pending cases. The court also concluded that application of the amendment to pending cases is appropriate because it acts as a repeal of a statutory grant of jurisdiction to the Public Employment Relations Board (PERB). CT
- Arbitration award was ambiguous, precluding review on appeal.
State
v. SEIU (Connecticut Ct App 10/20/2009) The public employer appealed from the trial court's confirmation of a grievance arbitration award rendered in the union's favor. The court reversed, concluding that the award's ambiguity precluded its evaluation on appeal. The court remanded, with instructions "to remand the matter to the arbitrator to answer the first question in the parties' submission in the affirmative or the negative." 9th
- Seamen's Wage Act claims are subject to arbitration.
Balen
v. Holland America Line (9th Cir 10/02/2009) Balen, a Filipino beverage attendant on a ship, sued his former employer claiming a violation of the Seamen's Wage Act. The trial court ordered the claim to be arbitrated; the 9th Circuit affirmed. Balen argued that Seamen's Wage Act claims are not subject to arbitration, and that they are exempt as "contracts of employment of seamen" under the Federal Arbitration Act. However, the court held that such claims are subject to arbitration pursuant to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Balen was subject to an arbitration provision in a collective bargaining agreement between his union and employer, and this agreement was enforceable under the UN Convention. MA
- Union entitled to presumption of arbitra
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