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Arbitration Law Memo November 2004
by Ross Runkel at LawMemo
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Arbitration - Individual Contracts ***
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WV - Arbitration clause didn't apply to stock option dispute.
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5th - Award rendered in ERISA plan participants' favor is upheld.
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Arbitration - Collective Bargaining Agreements ***
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5th - Reinstatement award did not "arguably construe" last chance agreement.
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MA - Reinstatement of jail employee did not violate public policy.
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9th - Salary and benefits payments to full time union steward didn’t violate LMRA.
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MT - Employer violated statutory legal duty when it refused to arbitrate grievance.
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DC - Union's unfair labor practice charges were timely filed with NLRB.
*** Arbitration - Individual Contracts ***
WV - Arbitration clause didn't apply to stock option dispute.
City Holding Co v. Kaufman (West Virginia 11/12/2004)
http://www.state.wv.us/wvsca/docs/fall04/31783.htm
Kaufman and his employer signed a severance agreement that included an arbitration clause. After Kaufman's termination, a dispute arose regarding stock options. Kaufman filed suit, and the employer filed a demand for arbitration with the American Arbitration Association and a motion to dismiss with the trial court. The trial court denied the motion to dismiss, and enjoined arbitration. The employer petitioned for a writ of prohibition seeking to prohibit the trial court from enforcing its order. The court denied the employer's petition, based on its conclusion that the severance agreement's arbitration clause didn't apply to the dispute over stock options.
GA - Award was modified to conform to settlement agreement.
Universal Management Concepts v. Noferi (Georgia Ct App
10/28/2004)
(Link not available)
Noferi sued the employer for failing to pay commissions. The dispute was submitted to binding arbitration which resulted in an award in favor of Noferi. The trial court modified the award to comply with a settlement agreement which provided for a maximum and a minimum award with a payment schedule for the amount of the award. The Georgia Court of Appeals affirmed. The court found no reason to curtail enforcement of the settlement agreement. The court stated the trial court did not clearly err in modifying the award to conform with the settlement agreement.
5th - Award rendered in ERISA plan participants' favor is upheld.
Kergosien v. Ocean Energy (5th Cir 11/02/2004)
http://caselaw.lp.findlaw.com/data2/circs/5th/0320953p.pdf
Kergosien was a participant in his employer’s Management Stability Plan. The plan, governed by the Employee Retirement Income Security Act (ERISA), provided for benefits for employees terminated within two years after a "change in control." Kergosien claimed he was wrongfully denied severance benefits under the plan, and he and other employees were awarded over $1.5 million by an arbitrator. The trial court vacated the arbitration award, on the basis that the arbitrator "exceeded his powers, misunderstood the law, and misread the contract." The 5th Circuit reversed, noting that "[t]he only one of these three grounds that is recognized by Fifth Circuit law is that the arbitrator exceeded his powers."
*** Arbitration - Collective Bargaining Agreements ***
5th - Reinstatement award did not "arguably construe" last chance agreement.
Continental Airlines v. Intl Brotherhood of Teamsters (5th
Cir 11/15/2004)
http://caselaw.lp.findlaw.com/data2/circs/5th/0420136p.pdf
The airline/employer appealed the trial court's grant of summary judgment in the union's favor, in employer's action seeking to vacate a grievance arbitration award under the Railway Labor Act (RLA). The award reinstated an employee who was discharged for allegedly violating a "last chance agreement" after testing positive for alcohol. The 5th Circuit reversed, concluding that the System Board's interpretation of the last chance agreement and the EAP agreement between the union and employer was not an "arguable interpretation" of those agreements.
MA - Reinstatement of jail employee did not violate public policy.
Sheriff Of Suffolk County v. AFSCME (Massachusetts Ct App
11/05/2004)
http://www.socialaw.com/appslip/appNov04g.html
The employer discharged the employee for failure to report an assault by other employees on an inmate and for lying to investigators. The arbitrator revoked the discharge, suspended the employee for six months with no pay or benefits and then ordered reinstatement. The Massachusetts Court of Appeals affirmed. The court found that the arbitrator's award was not contrary to public policy because the conduct could not simply be disfavored conduct but must be disfavored conduct which was integral to the performance of employment duties.
9th - Salary and benefits payments to full time union steward didn’t violate LMRA.
Intl Assn of Machinists v. BF Goodrich Aerospace (9th Cir
11/01/2004)
http://caselaw.lp.findlaw.com/data2/circs/9th/0355085p.pdf
The employer brought an action
seeking to vacate an arbitration award rendered in favor of the union.
The trial court declined to vacate the award, and the employer appealed.
The employer argued on appeal that a collective bargaining agreement (CBA)
provision, which required the employer to pay salary and benefits to a full time
shop steward (i.e. - a union steward who spent substantially all of his time on
his union steward duties), violated the Labor Management Relations Act (LMRA).
The 9th Circuit rejected that argument.
29 USC Section 186(a)(1) of the
LMRA states that it is "unlawful for any employer … to pay, lend, or
deliver, or agree to pay, lend, or deliver, any money or other thing of value
… to any representative of any of his employees who are employed in an
industry affecting commerce …. " The
court concluded that, "[l]ike the Third Circuit, the only other court of
appeals to have considered the [issue] – it is hard for us to resist
concluding that [the employer’s] payments to the …Steward fall within the
plain text of the statutory proscription."
The court also concluded, however, that the payments fell within an
exception to Section 186(a)(1), set forth in Section 186(c)(1).
Section 186(c)(1) exempts from Section 186(a)(1), payments to "any
representative of employees … who is also an employee … of such employer, as
compensation for, or by reason of, his service as an employee of such
employer." The court concluded that the shop steward's work in his capacity
as a union representative "serves the company's interests."
Fed - IRS' delay in taking disciplinary action against employee for disclosing taxpayer information was not unreasonable.
Zingg v. Department of Treasury IRS (Fed Cir 11/02/2004)
http://caselaw.lp.findlaw.com/data2/circs/fed/043139p.pdf
Zingg, an Internal Revenue Service (IRS) employee, petitioned for review of an arbitrator's decision upholding her removal for improperly disclosing tax information about 1300 taxpayers. The Federal Circuit affirmed, concluding that 1) the employer's delay in taking disciplinary action was not unreasonable; and 2) the penalty of removal was not an abuse of discretion.
MT - Employer violated statutory legal duty when it refused to arbitrate grievance.
Belgrade Educ Assn
v. Belgrade School Dist (Montana 11/12/2004)
http://www.lawlibrary.state.mt.us/dscgi/ds.py/Get/File-36474/04-187.pdf
The teachers' union sought a writ of mandate ordering the school district to arbitrate a grievance. The trial court denied the writ. The court reversed, concluding that "by failing to arbitrate ... the School District violated its clear legal duty under Section 39-31-306(5), MCA .... the legal duty requirement for a writ of mandate set forth in Section 27-26-102(1), MCA is satisfied."
DC - Union's unfair labor practice charges were timely filed with NLRB.
Exxon Chemical v. NLRB (DC Cir 10/26/2004)
http://caselaw.lp.findlaw.com/data2/circs/dc/031343a.pdf
The union filed an unfair labor practice charge with the National Labor Relations Board (NLRB), claiming the employer violated its collective bargaining agreement by refusing to arbitrate certain grievances. The NLRB ruled that the employer violated Sections 8(a)(1) and (5) of the National Labor Relations Act (NLRA). The DC Circuit enforced the NLRB's order. The court rejected the argument that the charges were not timely filed.
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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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