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Arbitration Law Memo June 2005
by Ross Runkel at LawMemo
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Arbitration - Individual Contracts ***
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9th - Employer's argument in support of renewed petition to compel arbitration was meritless.
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WV - Arbitration agreement had no consideration and was unconscionable.
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Arbitration - Collective Bargaining Agreements ***
*** Arbitration - Individual Contracts ***
CA - NASD rules preempt state ethics rules for arbitrators.
Jevne v.
Superior Court (California 05/23/2005)
http://caselaw.findlaw.com/data2/californiastatecases/S121532.PDF
This is
brokerage-customer case, not an employment case, but should have an impact on
NASD employment arbitrations. California adopted "Ethics Standards for
Neutral Arbitrators in Contractual Arbitration." These standards include
extensive disclosure requirements and standards for disqualifying arbitrators
(not applicable to collective bargaining arbitrations). National Association of
Securities Dealers (NASD) has its own rules which are less extensive than
California's. The California Supreme Court held that the NASD rules preempt the
entire set of California rules as to NASD arbitrations. This is because NASD
rules are reviewed and approved by the Securities and Exchange Commission, and
have the force of federal law, and California's rules would have a negative
effect on NASD arbitrations.
[Editor's
note: The 9th Circuit has also held that NASD rules preempt the California
rules. Credit Suisse v. Grunwald (9th Cir 03/01/2005) - http://caselaw.findlaw.com/data2/circs/9th/0315695P.pdf
]
1st - Email can create arbitration agreement, but did not.
Campbell v. General Dynamics (1st Cir
05/23/2005)
http://caselaw.lp.findlaw.com/data2/circs/1st/041828p.pdf
Campbell sued the employer, asserting a disability discrimination claim under the Americans with Disabilities Act (ADA). The trial court denied the employer's motion to compel arbitration. The 1st Circuit affirmed.
The employer sent an email to employees with an attachment containing an arbitration agreement. The employer expected employees to "accept" the agreement by continuing to work. The court observed that "the Electronic Signatures in Global and National Commerce Act (E-Sign Act), Pub.L. No. 106-229, 114 Stat. 464 (2000) (codified at 15 USC Sections 7001-7031), likely precludes any flat rule that a contract to arbitrate is unenforceable under the ADA solely because its promulgator chose to use e-mail as the medium to effectuate the agreement." The court explained, "[b]y its plain terms, the E-Sign Act prohibits any interpretation of the FAA's 'written provision' requirement that would preclude giving legal effect to an agreement solely on the basis that it was in electronic form." The court ultimately focused on ADA Section 513, and decided that arbitration was not "appropriate" because the email did not give the employee sufficient notice that the attachment contained an arbitration agreeement.
9th - Employer's argument in support of renewed petition to compel arbitration was meritless.
Ingle v. Circuit City (9th Cir
05/18/2005)
http://caselaw.lp.findlaw.com/data2/circs/9th/0455927p.pdf
After remand to the trial court pursuant to the 9th Circuit's decision in "Ingle I," the employer filed a renewed petition to compel arbitration of Ingle's federal discrimination claims. The trial court denied the petition and the 9th Circuit affirmed. The court dismissed as "meritless" the employer's argument that EEOC v. Luce, Forward, Hamilton & Scripps, 345 F.3d 742 (9th Cir 2003) implicitly undermined the 9th Circuit's holding in Ingle I.
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 had no consideration and was unconscionable.
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. The court concluded that the arbitration agreement lacked consideration because the employer's promise to review an employment application was not sufficient consideration, and also found that the agreement "is an unconscionable contract of adhesion."
*** Arbitration - Collective Bargaining Agreements ***
5th - Court of Appeals lacks jurisdiction on appeal of order compelling arbitration.
Machinists
Local 2121 v. Goodrich Corp (5th Cir 05/18/2005)
http://www.ca5.uscourts.gov/opinions/pub/04/04-10418-CV0.wpd.pdf
The union sued to compel arbitration of a dispute over retiree benefits in a collective bargaining agreement. The trial court granted partial summary judgment for the union; the 5th Circuit held that it lacked jurisdiction to review the trial court's order to arbitrate. The union actually made three claims: for (a) specific performance of the health care portion of the agreement, (b) specific performance of the arbitration clause, and (c) a declaration of rights under the agreement.
The 5th Circuit raised the question of its appellate jurisdiction on its own motion, and held that it lacked jurisdiction. (1) The trial court's order was not an appealable final order because it granted only part of the relief sought by the union. The trial court declined to address the declaratory judgment issue, closed the case administratively (the equivalent of a stay), and expressly retained jurisdiction. (2) The trial court stayed the case and ordered arbitration, and that is not an interlocutory injunction, and is not appealable under 28 USC 1292(a)(1). (3) The circuit court did not have appellate jurisdiction on the theory that the trial court wholly lacked jurisdiction. The employer argued that the union lacked standing under Labor Management Relations Act Section 301 because a union is limited to suing on behalf of "employees" and retirees are not employees. Without deciding that issue, the 5th Circuit ruled that the union had Section 301 standing because 52 retirees expressly authorized the union to represent them.
Fed - Federal employer's past practice of closing arbitration cases after one year of inactivity barred consideration of employee's grievance on the merits.
Cruz-Martinez v. Dept of Homeland
Security (Fed Cir 06/07/2005)
http://www.fedcir.gov/opinions/04-3271.pdf
Cruz-Martinez petitioned for review of an arbitrator's decision that his grievance (over his removal from the Department of Homeland Security) was not arbitrable. The arbitrator had found that the employer's past practice of closing arbitration cases after one year of inactivity barred consideration of Cruz-Martinez' case on the merits. The Federal Circuit affirmed, agreeing with the arbitrator's finding of a binding past practice.
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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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