Arbitration Law Memo - January 2010 
LawMemo
First in Employment Law

 *** Arbitration - Individual Arbitration Agreements ***

·         US - Supreme Court will decide whether it is for the court, or an arbitrator, to decide whether agreement to arbitrate is unconscionable.

·         FL - Plaintiff who prevailed in arbitration with former partners is awarded attorney fees and costs pursuant to wage-and-hour fee-shifting statute.

·         NJ - Tort claim barred because of prior arbitration.

*** Arbitration - Collective Bargaining Agreements ***

·         PA - Arbitrator's sanction resulted in denial of due process. (5-2).

·         NJ - Arbitrator's reinstatement of provisional employee upheld.

·         CA - County employer didn't improperly spend public funds for partisan electoral purposes by bargaining for unions' non-support of initiative measure.

·         IL - Civil service board didn't err in declining to give preclusive effect to arbitration award.

·         Dist - Arbitrator erred in rejecting union's grievance, based on union's mistaken citation to irrelevant CBA provision.

·         PA - Arbitrator's award for lost work upheld.

·         MA - Municipal employer was obligated to restore concessions made by employees, after receiving funds enabling it to do so.

·         MT - Political affiliation discrimination claims, asserted under Montana Constitution, were subject to requirements of Montana Human Rights Act.

·         NY - Trial court didn't err in staying arbitration of police officers' union's grievance regarding replacement of healthcare provider.

*** Arbitration - Individual Arbitration Agreements ***

US - Supreme Court will decide whether it is for the court, or an arbitrator, to decide whether agreement to arbitrate is unconscionable.

Rent-A-Center West v. Jackson (Certiorari granted 01/15/2010)
http://www.lawmemo.com/supreme/case/jackson/

Jackson sued under 42 USC Section 1981, claiming race discrimination and retaliation. The trial court granted the employer's motion to dismiss and to compel arbitration. The 9th Circuit (2-1) reversed. The US Supreme Court granted certiorari on January 15 to review the 9th Circuit judgment.

When he was hired, Jackson signed an agreement to arbitrate all future disputes. That agreement provided, "The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable."

Jackson argued that the arbitration agreement was unconscionable, and that the issue of unconscionability must be decided by a court rather than an arbitrator. The 9th Circuit held that "where, as here, a party challenges an arbitration agreement as unconscionable, and thus asserts that he could not meaningfully assent to the agreement, the threshold question of unconscionability is for the court."

FL - Plaintiff who prevailed in arbitration with former partners is awarded attorney fees and costs pursuant to wage-and-hour fee-shifting statute.

BDO Seidman v. Bee (Florida Ct App 01/06/2010)
http://case.lawmemo.com/fl/bdo.pdf

Bee arbitrated a dispute with his former partners, seeking damages for breach of an agreement (entitled "Understanding Regarding Continued Employment") that was separate from his partnership agreement.  The arbitrator awarded Bee about $4 Million plus interest.  Bee sought confirmation of the award by the trial court, along with attorney fees and costs pursuant to a statute applicable to actions for unpaid wages (Section 448.08, Florida Statutes).  The trial court confirmed the award and granted Bee his fees and costs under the statute.  The court affirmed, reasoning that inclusion of the word "employment" in the agreement supported the characterization of the unpaid compensation as "wages."  The court noted, "if LLPs and other partnership entities operating in Florida intend to avoid statutory fee-shifting in compensation disputes involving a Florida partner or partnership, it may be advisable to put that intention in writing."

NJ - Tort claim barred because of prior arbitration.

Brovich v. Hudson News Group (New Jersey App Div 01/12/2010)
http://case.lawmemo.com/nj/brovich.pdf

Brovich sued the employer, asserting a state law hostile environment sexual harassment claim.  He also sued one of the employer's customers, asserting a claim for tortious interference with contractual relationship.  The trial court dismissed both claims.  The court affirmed, concluding that 1) Brovich's sexual harassment claim was untimely filed; and 2) Brovich's tortious interference claim was barred by the doctrine of collateral estoppel, arising from an arbitrator's prior factual determination.

*** Arbitration - Collective Bargaining Agreements ***

PA - Arbitrator's sanction resulted in denial of due process. (5-2).

City of Philadelphia v. Fraternal Order of Police (Pennsylvania 12/29/2009)
http://case.lawmemo.com/pa/philadelphia1.pdf
Dissent: http://case.lawmemo.com/pa/philadelphia1a.pdf
Dissent: http://case.lawmemo.com/pa/philadelphia1b.pdf

The arbitrator reinstated the police officer. The trial court denied review. The Pennsylvania Commonwealth Court reversed, which the Pennsylvania Supreme Court affirmed.

The issue was whether the Commonwealth Court expanded improperly the limited scope of review applicable to an Act 111 grievance arbitration by holding that an arbitrator violated the employer's procedural due process rights when the arbitrator precluded the employer from presenting any evidence because of its failure to comply with a duly issued subpoena. Because the arbitrator found no willful misconduct or bad faith and relied on evidence not of record in this specific arbitration to support his ruling, the court raised the question of whether the employer was afforded a fair opportunity to be heard. Noting that the arbitrator's sanction excluded the employer's entire case-in-chief, the court concluded that the employer was improperly denied due process.

The DISSENT argued that the arbitrator simply imposed a sanction within his discretionary authority, which constituted a final, non-appealable determination of the arbitrator.

NJ - Arbitrator's reinstatement of provisional employee upheld.

Cnty of Hudson v. AFL-CIO (New Jersey App Div 01/15/2010)
http://case.lawmemo.com/nj/hudson.pdf

The employer appealed an arbitration award ordering employee reinstatement. The trial court vacated the arbitration award. The New Jersey Appellate Division reversed.

The employee obtained a provisional appointment limited to twelve months, failed to pass the test for permanent appointment, and was laid-off after six months and before twelve months. The arbitrator interpreted the collective bargaining agreement (CBA) to provide that a provisional employee who completed six months of such employment could only be discharged in accordance with the lay-off procedures of the CBA, since state law did not mandate discharge prior to twelve months. The arbitrator noted that the lay-off procedures were not followed and that management prerogatives were not impermissibly denied or preempted. The court found the arbitrator's interpretation reasonably debatable.

CA - County employer didn't improperly spend public funds for partisan electoral purposes by bargaining for unions' non-support of initiative measure.

Diquisto v. Cnty of Santa Clara (California Ct App 01/22/2010)
http://case.lawmemo.com/ca/diquisto.pdf

Taxpayers sued the county employer, alleging that the employer improperly spent public funds for partisan electoral purposes by bargaining for unions' non-support of an initiative measure.  The measure would have mandated binding arbitration as a means of resolving labor disputes with the employer.  The employer prevailed after a bench trial.  The court affirmed, rejecting the taxpayers' arguments that the employer impermissibly used public funds for campaigning, both at the bargaining table and through a county board of supervisor's email.  The court concluded that 1) California's Meyers-Milias-Brown Act authorized the employer's discussion of binding interest arbitration at the bargaining table; 2) substantial evidence supported the trial court's determination that there was no quid pro quo arrangement of higher pay in exchange for the unions' political silence; and 3) neither the labor negotiations nor the email ran afoul of Stanson v. Mott (1976) 17 Cal.3d. 206.

IL - Civil service board didn't err in declining to give preclusive effect to arbitration award.

Marzano v. Cook Cnty Sheriffs Merit Bd (Illinois Ct App 01/13/2010)
http://case.lawmemo.com/il/marzano.pdf

Marzano appealed a civil service board's decision discharging her from her job as a county corrections officer.  Marzano's discharge arose from her excessive absenteeism, allegedly due to medical problems.  The trial court affirmed the board's decision.  The court affirmed, concluding that 1) the board's findings of fact provided a sufficient basis for determining the existence of "cause" for Marzano's discharge; 2) the board didn't err in declining to give preclusive effect to an arbitration award rendered in proceedings before the Illinois Labor Relations Board (ILRB); and 3) Marzano's due process rights were not violated.

Dist - Arbitrator erred in rejecting union's grievance, based on union's mistaken citation to irrelevant CBA provision.

PERB v. Fraternal Order of Police (Dist of Columbia 01/28/2010)
http://case.lawmemo.com/dist/perb.pdf

The police officers' union filed a grievance, seeking unpaid overtime compensation and liquidated damages.  An arbitrator declined to reach the merits of the dispute, instead finding that no proper grievance had been filed because the union mistakenly cited to an irrelevant provision in the parties' collective bargaining agreement (CBA).  The Public Employee Relations Board (PERB) affirmed, but the trial court reversed.  The court affirmed the trial court's decision.  The arbitrator had characterized the union's citation error as "substantive" rather than "technical."  The court reasoned that the arbitrator's characterization "elevates form over substance contrary to the public policy favoring arbitration where the parties have agreed to it."  The court further reasoned that "PERB's failure likewise to let this matter proceed to arbitration despite [the employer's] full awareness of the nature of the ... grievance requires us to set aside its decision."

PA - Arbitrator's award for lost work upheld.

Pennsylvania Turnpike Commn v. Teamsters (Pennsylvania Cmwlth Ct 01/28/2010)
http://case.lawmemo.com/pa/turnpike.pdf

The employer petitioned for review of an arbitration award for lost work opportunities. The Pennsylvania Commonwealth Court affirmed.

The dispute related to the use of supplemental workers in violation of the collective bargaining agreement (CBA). The court found (1) the arbitrator's award of back pay was within the arbitrator's discretion, (2) the arbitrator reconciled two provisions of the CBA dealing with use of supplemental workers in a rational way, (3) the arbitrator's decision was based upon clear and unambiguous contract language that did not allow for a different interpretation for one local union, (4) the arbitrator gave the memo and testimony regarding implementation of new contract language their proper consideration and did not thereby modify any provision of the CBA, and (5) the arbitrator correctly refused to modify the CBA to expand its use of supplemental employees beyond the express limits set forth in the CBA.

MA - Municipal employer was obligated to restore concessions made by employees, after receiving funds enabling it to do so.

City of Lynn v. Lynn Police Assoc (Massachusetts 01/06/2010)
http://case.lawmemo.com/ma/lynn1.htm

The municipal employer sought to vacate an arbitration award directing it to restore wages and benefits voluntarily relinquished by the police officers' union.  Those concessions had been made in a memorandum of agreement (MOA) modifying the parties' collective bargaining agreement, which was entered into when the employer was on the verge of bankruptcy.  The trial court granted judgment on the pleadings in the union's favor, and the appellate court below affirmed.  The court affirmed.  The court rejected the argument that compliance with the arbitration award would violate the "Lynn Bailout Act" (St. 1985, c. 8).  The court declined to disturb the arbitrator's finding that, by failing to restore the concessions to the union members after receiving certain grant funds, the employer violated the MOA.

MT - Political affiliation discrimination claims, asserted under Montana Constitution, were subject to requirements of Montana Human Rights Act.

Edwards v. Cascade Cnty Sheriff's Dept (Montana 12/31/2009)
http://case.lawmemo.com/mt/edwards.pdf

Sheriff's Deputies and their superiors sued the employer, asserting (among other things) state law claims for political affiliation discrimination and violation of wage-and-hour laws.  The political affiliation discrimination claims were asserted under both the Montana state constitution and the Montana Human Rights Act (MHRA).  The trial court dismissed the majority of the employees' claims.  The court affirmed in part and reversed in part, concluding that 1) the constitutional political affiliation discrimination claims were barred, since they fell within the scope of the MHRA and the employees failed to exhaust their administrative remedies via the filing of charges with the Montana Human Rights Bureau (HRB); and 2) the collective bargaining agreement (CBA) between the deputies' bargaining unit and the employer did not "clearly and unmistakably" cover the deputies' statutory discrimination and wage claims, and the deputies were thus not required to engage in grievance arbitration of those claims prior to filing suit.

NY - Trial court didn't err in staying arbitration of police officers' union's grievance regarding replacement of healthcare provider.

Correctional Officers Assoc v. Dept of Civil Serv (New York App Div 12/31/2009)
http://case.lawmemo.com/ny/police.htm

The police officers' union appealed the trial court's judgment staying grievance arbitration of a dispute about healthcare providers.  The union argued that the employer could not substitute a new healthcare provider in place of the prior one, without approval of the "Joint Committee on Health and Dental Benefits."  The court rejected that argument, stating "[t]o allow a Joint Committee to make the determinative decision in awarding a state service contract would constitute an impermissible delegation of the state's obligations in letting contracts."  The court concluded that "arbitration of this grievance would violate state statutes and public policy and there is no remedy that would avoid that result if [the union] prevailed in arbitration."