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Arbitration Law Memo August 2004
by Ross Runkel at LawMemo
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Arbitration - Individual Contracts ***
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Arbitration - Collective Bargaining Agreements ***
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5th - Interest arbitration award vacated because underlying contract had expired.
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IL - Workers' compensation benefits for concurrent employment were not arbitrable.
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7th – NLRB's decision in Section 10(k) proceeding overrides arbitrator's conflicting decision.
*** Arbitration - Individual Contracts ***
CA - Post-dispute arbitration provision contained in settlement agreement was unconscionable.
Nyulassy v. Lockheed Martin Corp. (California Ct App
07/27/2004)
http://caselaw.findlaw.com/data2/californiastatecases/H026704.PDF
Nyulassy sued the employer, asserting state law claims for breach of contract, breach of the covenant of good faith and fair dealing, wrongful demotion in violation of public policy, and violation of Section 6310 of the California Labor Code. The employer moved to compel arbitration. The trial court denied the motion, and the court affirmed. The court concluded that the arbitration provision, contained in a settlement agreement resolving an earlier dispute, was unconscionable. The agreement (a) required Nyulassy to arbitrate his claims but did not require the employer to arbitrate its claims; (b) required Nyulassy to discuss his case with supervisors prior to arbitrating; and (c) imposed a 180 day limitation period.
AZ - All arbitration agreements in employment contracts were exempt from Arizona Uniform Arbitration Act.
North Valley Emergency Specialists v. Santana (Arizona
07/14/2004)
http://www.supreme.state.az.us/opin/pdf2004/CV030279PR.pdf
The employer filed a motion to
compel arbitration. The trial court granted the employer's motion. The Arizona
Supreme Court reversed.
The issue before the court was
whether Arizona Revised Statutes (ARS) Section 12-1517 exempted all arbitration
agreements between employers and employees from the Arizona Uniform Arbitration
Act (AUAA) or exempted only those found in collective bargaining agreements.
The court noted that the Arizona
legislature adopted the Uniform Arbitration Act (UAA) but changed section 1 to
provide the UAA has "no application to arbitration agreements between
employers and employees or their respective representatives." ARS Section
12-1517. The court found this modification was intentionally done to change the
meaning of the UAA in Arizona. The court held that ARS Section 12-1517 exempted
all employment contracts from the AUAA.
*** Arbitration - Collective Bargaining Agreements ***
6th - Hours for which employee was compensated, pursuant to arbitrator's prior "make-whole" relief award, counted toward FMLA's eligibility requirement.
Ricco v. Potter
(6th Cir 07/27/2004)
http://laws.findlaw.com/6th/04a0242p.html
Ricco
sued the employer, asserting a claim under the Family and Medical Leave Act (FMLA).
The trial court dismissed the case under Fed.R.Civ.P. 12(b)(6). The 6th Circuit reversed.
In
order to qualify as an "eligible employee" entitled to FMLA
protection, an employee must have been employed "i) for at least 12 months
by the employer with respect to whom leave is requested ...; and ii) for at
least 1,250 hours of service with such employer during the previous 12-month
period." The FMLA does not
define "hours of service."
Ricco
had already been discharged on an earlier occasion by the employer, thus
limiting the number of hours she worked in the prior 12 months to fewer than
1250 and rendering her ineligible for FMLA protection.
She later prevailed in grievance arbitration, however, and received a
"make whole" award compensating her for hours missed as the result of
the earlier discharge. Ricco argued
that the hours for which she was compensated pursuant to the make-whole award
should be counted toward the 1250 hour requirement.
The employer argued to the contrary, asserting that only hours actually
worked should be counted toward the requirement.
The court agreed with Ricco, holding that "make-whole relief awarded
to an unlawfully terminated employee may include credit toward the
hours-of-service requirement contained in the FMLA's definition of 'eligible
employee.'" The court reasoned
that "[t]he goal of a make-whole award is to put the employee in the same
position that she would have been in had her employer not engaged in the
unlawful conduct; this includes giving the employee credit towards the FMLA's
hours-of-service requirement for hours that the employee would have worked but
for her unlawful termination."
3rd - LMRA immunizes union's attorney from employee's malpractice claim arising out of representation in arbitration proceeding.
Carino v. Stefan
(3rd Cir 07/19/2004)
http://caselaw.lp.findlaw.com/data2/circs/3rd/033679p.pdf
Carino
sued the attorney hired by her union to represent her in a labor grievance
arbitration. The trial court
dismissed the case pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a
claim. The 3rd Circuit affirmed.
The
court noted that "[t]his appeal presents a question of first impression for
our Court, namely, whether an attorney hired on behalf of a union member in
connection with an arbitration hearing conducted pursuant to a collective
bargaining agreement is immune from suit for malpractice by that member."
The court held that such a suit is barred by the Labor Management
Relations Act (LMRA). Section
301(b) of that act provides that "[a]ny money judgment against a labor
organization in a District Court of the United States shall be enforceable only
against the organization as an entity and against its assets, and shall not be
enforceable against any individual member or his assets."
Under Atkinson v. Sinclair Refining Co., 370 US 238 (1962), and Complete
Auto Transit, Inc. v. Reis, 451 US 401 (1981), Section 301(b) prohibits a claim
for damages against an individual union officer even if that individual's
conduct was unauthorized by the union and in violation of an existing collective
bargaining agreement. The court
noted that "[t]he only courts of appeals to have considered the specific
question presented here ... have uniformly concluded that Atkinson prohibits
claims made by a union member against an attorney employed by or retained by the
union to represent the member in a labor dispute."
NJ - Employer did not waive statutory right not to renew non-certificated employment under collective negotiation agreement (4-3).
Camden Bd of Ed v. Alexander
(New Jersey 08/12/2004)
http://www.judiciary.state.nj.us/opinions/supreme/a-34-02.pdf
Alexander sought arbitration of
the non-renewal of his custodian position. The employer sought to restrain
arbitration, which was denied. The New Jersey Supreme Court reversed.
The employer sent a letter
warning Alexander that excessive absenteeism might result in not being
recommended for reappointment for the school year. Alexander was not
reappointed. The question before the court was whether arbitration should be
permitted.
The court noted that New Jersey
Statutes Annotated, Title 18A:27-4.1 provided that the employer could non-renew
a non-certificated employee for any reason that was not arbitrary or capricious.
The court found that the collective bargaining agreement did not make
non-renewals subject to arbitral review. The court held that the collective
bargaining agreement did not effectuate a waiver of the employer's non-renewal
right.
The DISSENT argued that the
presumption of arbitrability required the dispute to proceed before an
arbitrator and noted that the disciplinary grievance procedure was avoided by
this holding.
5th - Interest arbitration award vacated because underlying contract had expired.
Local Union No 898 IBEW v. XL
Electric (5th Cir 08/10/2004)
http://caselaw.lp.findlaw.com/data2/circs/5th/0310053p.pdf
The union appealed the trial
court's refusal to enforce an interest arbitration award rendered in the union's
favor. The 5th Circuit affirmed.
The court reasoned that the agreement containing the arbitration clause
at issue had expired before the union submitted the unresolved negotiation
issues to arbitration. Thus, there was no valid agreement in place under which
the matter could be arbitrated.
IL - Workers' compensation benefits for concurrent employment were not arbitrable.
City of Rockford v. Unit Six of The Policemen's Benevolent
and Protective Assn of Illinois (Illinois Ct App 07/28/2004)
http://www.lawmemo.com/emp/docs/il/rockford.htm
The employer sued the employees for a declaration that arbitration of workers compensation was not required. The trial court granted the employees' motion for summary judgment. The Illinois Appellate Court reversed. The court noted that under the Public Labor Relations Act all matters were arbitrable unless the parties agreed otherwise. The court concluded, based upon the collective bargaining agreement's definition of grievance and of the arbitrator's authority, that the parties evinced an intent to exclude from arbitration the subject of workers' compensation benefits for wages attributable to concurrent employment.
7th – NLRB's decision in Section 10(k) proceeding overrides arbitrator's conflicting decision.
Advance Cast Stone Co v. Bridge Structural and Reinforcing
Iron Workers (7th Cir 07/22/2004)
http://caselaw.lp.findlaw.com/data2/circs/7th/033090p.pdf
The trial court vacated an arbitration award entered in favor of the union. The arbitrator had agreed with the union that the employer was bound by a multi-employer agreement with the union, and that the employer thus committed an unfair labor practice when it assigned certain positions to members of another union. The trial court based its decision on the results of a "10(k) determination" rendered by the National Labor Relations Board (NLRB), in which the NLRB found that the employer was not bound by any collective bargaining agreements with the union. Since the NLRB's 10(k) determination conflicted with the arbitrators' decision that the employer was bound by a collective bargaining agreement with the union, the trial court applied settled 7th Circuit precedent ("an NLRB decision issued pursuant to a Section 10(k) proceeding overrides a conflicting decision by an arbitrator") and vacated the arbitration award. The 7th Circuit affirmed.
5th - Arbitrators lacked authority to amend their award.
Smith v. Transport Workers Union
of America (5th Cir 07/06/2004)
http://www.ca5.uscourts.gov/opinions/pub/04/04-10230-CV0.wpd.pdf
A former union officer sued the
union. The litigation was stayed
pending arbitration. An arbitration
award was rendered, and then modified more than a month later.
The collective agreement allowed the arbitrators to amend the award
within three business days. The trial court vacated the modification and
confirmed the initial award. The
5th Circuit affirmed, observing that "the arbitration agreement clearly
restricts the authority of the arbitrators to amend or correct their
award."
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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