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Arbitration Law Memo May 2005
by Ross Runkel at LawMemo
Arbitration Blog http://www.lawmemo.com/arbitrationblog/
online, and via RSS feed. Boys Market Injunction was too broad; Modifiable
agreement supported by consideration; Promise to arbitrate is consideration; Can
non-signatory successor union force arbitration?; Reinstatement violated public
policy.
LawMemo Employment Law Blog
http://www.lawmemo.com/blog/ online,
and via RSS feed. Gender-specific standards go to en banc hearing; Tum v. Barber
Foods - Petitioner's brief; Is 15-employee threshold jurisdictional?; Walsh
re-nominated to NLRB; FLSA opinion letters on line.
NLRB Law Memo http://www.lawmemo.com/nlrb/memo/
online, via RSS feed, and via email.
Arbitration Law Memo http://www.lawmemo.com/arb/memo/
on line, via RSS feed, and via email.
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Arbitration - Individual Contracts ***
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WV - Arbitration agreement was unconscionable and lacked consideration.
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10th - Claims not subject to arbitration where arbitration clause was narrowly drafted.
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Arbitration - Collective Bargaining Agreements ***
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1st - Trial court's grant of "Boys Market" injunction affirmed in substantial part.
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NY - Dispute was not arbitrable where terms of CBA were not involved.
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CT - Trial court substituted its judgment for the arbitrators'.
*** Arbitration - Individual Contracts ***
MD - Arbitration agreement was supported by consideration.
La' Tia v. Circuit
City Stores (Maryland Ct App 05/05/2005)
http://www.courts.state.md.us/opinions/cosa/2005/1145s04.pdf
La' Tia sued the employer, alleging sex discrimination. The trial court granted the employer's motion to compel arbitration, and La' Tia appealed. La' Tia argued that (among other things) the trial court erred in concluding that the arbitration agreement was enforceable, even though the employer had the power to unilaterally modify the agreement. The court affirmed, rejecting that argument. The court held that the arbitration agreement was supported by consideration "because [the employer] agreed to be bound to give [La' Tia] notice before altering the terms of the arbitration agreement, and [La' Tia] would then have had an opportunity to decline to continue her employment under [the employer's] new terms .... "
WV - Arbitration agreement was unconscionable and lacked consideration.
Saylor v. Wilkes
(West Virginia 05/11/2005)
http://www.state.wv.us/wvsca/docs/spring05/32042.htm
Saylor sued the employer, asserting a state law sexual harassment claim. The trial court ordered the parties to arbitration, based on its determination that the parties' arbitration agreement was enforceable. Saylor filed a "petition for prohibition" with the court, and the petition was granted. The court concluded that the arbitration agreement "is an unconscionable contract of adhesion and ... lacks consideration." Unconsionability was present, in part because the arbitration provider retained the right to modify the arbitration rules without notice. The court also held that the employer's promise to consider an applicant for employment could not be consideration for the applicant's promise to arbitrate.
WA
- Arbitration clause in Yacht Broker's Association bylaws wasn't impliedly
incorporated into employment agreement.
Todd v. Venwest Yachts (Washington Ct App 05/02/2005)
http://www.courts.wa.gov/opinions/?fa=opinions.opindisp&docid=542150MAJ
Todd sued the employer, seeking unpaid sales commissions for boat sales and orders generated by him. The employer moved to dismiss or stay the proceedings, on the basis that Todd was obligated to mediate and/or arbitrate the dispute. The trial court denied the employer's motion, and the Washington Court of Appeals affirmed.
Todd's employment contract did not contain an arbitration agreement. However, both he and the employer were members of the Northwest Yacht Broker's Association, and the Association's bylaws contained a clause requiring mediation and/or arbitration "[w]hen a dispute arises between members .... " The employment agreement made no mention of the Association or its bylaws, and made no attempt to incorporate by reference anything to do with the Association, its bylaws, or the bylaws' dispute resolution provision.
The employer argued that, by virtue of their memberships in the Association, both it and Todd agreed to arbitrate pursuant to the bylaws. The employer analogized the Association's arbitration clause to the National Association of Securities Dealers (NASD) Code of Arbitration, which applies to employment disputes between NASD members even where the members' employment agreements do not reference the NASD Code. The court rejected that argument, however, stating "the analogy does not hold up." The court noted that the NASD's "Form U-4" contains a standard arbitration clause, and is an integral part of all NASD members' employment agreements. The court also noted that membership in the NASD is mandatory for securities brokers, but that membership in the Association is not mandatory for boat salespersons.
10th - Claims not subject to arbitration where arbitration clause was narrowly drafted.
Cummings v. FedEx (10th Cir 04/20/2005)
http://laws.findlaw.com/10th/041247.htm
Cummings sued the employer for breach of an implied contract, breach of the implied duty of good faith and fair dealing arising out of an implied contract, and other claims. The trial court denied the employer's motion to compel arbitration. The 10th Circuit Court affirmed.
The court stated that the parties clearly manifested an intent to narrowly limit arbitration to specific disputes regarding the termination of the operating agreement, and noted that where the arbitration clause was narrow, a collateral matter will generally be ruled beyond its purview. The court agreed with the trial court that Cummings did not allege that the employer actually or constructively terminated the operating agreement, which, according to its unambiguous terms, were the only disputes subject to arbitration. The court did not decide the effect of the merger clause in the operating agreement and the parole evidence rule, but noted it was not relevant to the question of whether the claims were subject to arbitration.
*** Arbitration - Collective Bargaining Agreements ***
1st - Trial court's grant of "Boys Market" injunction affirmed in substantial part.
Otis Elevator Co v. Intl Union Of Elevator Constructors
(1st Cir 05/11/2005)
http://laws.findlaw.com/1st/041933.html
The trial court
granted a preliminary injunction (under Boys Markets, Inc. v. Retail Clerks
Union, Local 770, 398 US 235 (1970)) enjoining the union from striking over a
subject that was covered by the collective bargaining agreement's arbitration
clause. The 1st Circuit affirmed in
substantial part, concluding that the trial court "correctly enjoined the
work stoppage, and rightly ordered the parties to submit the ... dispute to
arbitration." The court also
concluded, however, that the trial court exceeded its discretion in 1) requiring
the parties to submit to an arbitration scheme different than that set forth in
the CBA; and 2) restraining the employer from disciplining employees engaged in
strike activity in violation of the CBA's no-strike clause.
7th - Reopener did not terminate CBA's "evergreen" clause.
Office and Professional Employees v. Wood County Telephone
Co (7th Cir 05/10/2005)
http://caselaw.lp.findlaw.com/data2/circs/7th/043689p.pdf
The employer and union entered into negotiations over a new collective bargaining agreement (CBA). The existing agreement had an "evergreen" clause providing that the agreement would continue in effect until one of the parties provided 60 days notice of intent to terminate it. During the negotiation process, two employees were disciplined and related grievances were filed. The employer declined to arbitrate the grievances, arguing that the new CBA covered the dispute and didn't require arbitration - even though the employer had continued to abide in all other respects by the old agreement. The union filed suit, seeking an order requiring the employer to arbitrate. The trial court granted summary judgment to the employer, on the basis that the union provided notice of its intent to terminate the agreement when it asked to "reopen" negotiations. The 7th Circuit reversed, noting that "'[r]eopen' and 'terminate' are different ideas as well as different words." The court noted additionally, "we cannot see ... any reason why this evergreen clause should be read to prevent dickering while the old terms continue."
NY - Dispute was
not arbitrable where terms of CBA were not involved.
Police Benevolent Assn v. Governor's Office (New York App Div
04/28/2005)
http://www.courts.state.ny.us/reporter/3dseries/2005/2005_03314.htm
The trial court denied the union's petition to compel arbitration of a
grievance seeking a physical fitness bonus. The New York Supreme Court,
Appellate Division affirmed. The court noted that since the collective
bargaining agreement (CBA) was silent on the subject of physical fitness bonus
payments, the dispute did not involve a term or condition of the CBA. The court
further noted that under the memorandum of understanding extending the CBA,
interest arbitration awards were not agreements as defined in the Civil Service
Law. The court ruled that the parties did not agree to arbitrate this dispute.
CT - Trial court substituted its judgment for the arbitrators'.
Bd of Educ v. Civil Service
Employees (Connecticut Ct App 04/19/2005)
http://www.jud.state.ct.us/external/supapp/Cases/AROap/AP88/88AP256.pdf
A public school employees' union
appealed the trial court's decision vacating a grievance arbitration award
rendered in favor of a school bus driver. The
court reversed, noting that "the [trial] court improperly substituted its
interpretative judgment for that of the [arbitration] panel."
MA - Arbitrator's reinstatement award affirmed.
Town of Watertown v. Watertown
Municipal Employees (Massachusetts Ct App 04/15/2005)
http://www.socialaw.com/slip.htm?cid=15140&sid=119
A municipal employee was
discharged for allegedly abusing his Family and Medical Leave Act (FMLA) leave.
An arbitrator ordered the employee reinstated, on the basis that the
discharge decision was not supported by "just cause."
The trial court affirmed the arbitration award.
The court affirmed, stating "[i]t is not our role to reinterpret the
facts or to measure the level of misconduct justifying discipline or discharge
under the contract."
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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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