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Arbitration Law Memo November 2005
by Ross Runkel at LawMemo
Arbitration Law Memo - November 2005
by LawMemo - World's Best
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Arbitration - Individual Contracts ***
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CA - FAA doesn't preempt state disclosure laws; award vacated.
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11th - Unsigned agreements qualify as "written agreements" under the FAA.
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2nd - Court question in Bower limited under MPPAA to cases involving employer status per se.
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TX - Employees' claims against individual defendants fell within the scope of arbitration agreement.
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TX - Employer's problem solving procedure was not arbitration agreement.
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8th - Arbitration panels' interpretation of contract was reasonable.
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Arbitration - Collective Bargaining Agreements ***
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11th - Norris-LaGuardia Act prohibits injunction to prevent arbitration.
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1st - Presumption in favor of postexpiration arbitration was applied.
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IL - Employee with CBA required to arbitrate statutory wage claims.
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Fed - Denial of petition for attorney fees under Back Pay Act was arbitrary.
*** Arbitration - Individual Contracts ***
CA - FAA doesn't preempt state disclosure laws; award vacated.
Ovitz
v. Schulman (California Ct App 10/26/2005)
http://caselaw.lp.findlaw.com/data2/californiastatecases/b179978.pdf
The California Judicial Council promulgated the California Ethics Standards for Neutral Arbitrators in Contractual Arbitration. Those standards require arbitrators to make comprehensive disclosures of potential grounds for disqualification. When an arbitrator fails to make a timely disclosure of potential grounds for disqualification, the California Code of Civil Procedure requires that any award rendered by the arbitrator be vacated. Cal. Code Civ. Proc. Section 1286.2, subd. (a)(6)(A) (Section 1286.2(a)(6)(A)).
The Federal Arbitration Act (FAA), on the other hand, employs a different standard in this context: it permits the vacating of an arbitration award only upon a showing of "evident partiality" by the arbitrator. 9 USC Section 10(a)(2). In the context of an arbitrator's failure to disclose, the 9th Circuit interprets "evident partiality" to mean that the undisclosed facts must create a "reasonable impression of partiality." The court held that Section 10(a)(2) does not preempt Section 1286.2(a)(6)(A), based on the court's review of "the language of the relevant sections of the FAA, the congressional purpose of that legislation, and the parties' arbitration agreement."
11th - Unsigned agreements qualify as "written agreements" under the FAA.
Caley v. Gulfstream Aerospace (11th Cir
10/31/2005)
http://caselaw.lp.findlaw.com/data2/circs/11th/0414462p.pdf
Caley and other employees sued the employer, asserting various claims under the Fair Labor Standards Act (FLSA), Title VII, the Age Discrimination in Employment Act (ADEA), and the Employee Retirement Income Security Act (ERISA). The trial court granted the employer's motion to compel arbitration pursuant to the employer's arbitration agreement. The 11th Circuit affirmed.
Caley argued that the arbitration agreement wasn't enforceable, since it was not signed. The Federal Arbitration Act (FAA) requires that an arbitration agreement be an "agreement in writing," and uses terms such as "written provision," "agreement in writing," and "written agreement." The court rejected the notion that an arbitration agreement must be signed in order to constitute an "agreement in writing" under the FAA. The court noted that "[n]othing in FAA suggests that a 'written provision' must be signed to be enforceable." The court also noted that "the overwhelming weight of authority supports the view that no signature is required to meet the FAA's 'written' requirement."
FL - Employer waived its right to demand arbitration.
Mora v. Abraham Chevrolet (Florida Ct
App 09/21/2005)
http://www.2dca.org/opinion/September%2021,%202005/2D04-5778.pdf
Mora sued the employer, asserting a state law whistleblower claim under Florida statutes. The trial court compelled arbitration of the case, and Mora appealed. The court reversed, concluding that the employer waived it right to demand arbitration by failing to make its demand before participating in the litigation - serving an answer and affirmative defenses, and beginning discovery.
2nd - Court question in Bower limited under MPPAA to cases involving employer status per se.
New York State Teamsters Fund v. Express
Services (2nd Cir 10/12/2005)
http://www.lawmemo.com/docs/2/teamsters.pdf
The pension and retirement fund sued the bankrupt employer and common control or alter ego employers for the "withdrawal liability" under the Multiemployer Pension Plan Amendments Act (MPPAA). The trial court granted the motions for summary judgment of the jointly liable employers. The 2nd Circuit Court affirmed.
The primary issue on appeal was whether the trial court erred in deciding itself, rather than submitting to arbitration, the issue of employer status under the MPPAA. The court in Bowers v Transportacion Maritima, Mexicana, SA 901 F2d 256 (1990) held that employer status was a threshold legal issue requiring judicial resolution, since an entity that was not an employer could not, under the MPPAA, be required to arbitrate. The court noted that subsequent decisions in other circuit courts drew a distinction between disputes over (1) whether the defendant was ever an employer obligated under the MPPAA to make payments to the pension fund, a question for the court; and (2) whether the defendant employer ceased to have that obligation before the payments in question became due, a question for the arbitrator. The court read Bowers as limited to cases involving disputes over employer status per se.
PA - Employee did not seek clarification or judicial review of arbitrator's award within statutory limitations.
Symons v. Schuykill County Vocational
School (Pennsylvania Cmwlth Ct 10/12/2005)
http://www.courts.state.pa.us/OpPosting/CWealth/out/256CD05_10-12-05.pdf
The arbitrator issued an award in favor of the employer on a furloughed employee grievance. Four months later the employee sought a clarification of the award and two years later the arbitrator issued a clarification of his original award. The employee appealed the clarification award. The trial court granted the employer's motion to dismiss. The Pennsylvania Commonwealth Court affirmed. The court applied the Uniform Arbitration Act (42 PaCS Sections 7311(b) and 7314-7315) which required an application to modify or correct be filed within 10 days after the delivery of the award and that judicial review be sought within 30 days of the delivery of the award. The court held that the arbitrator was without authority to issue a clarification and that the employee did not seek timely review of the original either within 10 days to the arbitrator or within 30 days to the trial court.
6th - Interpretation of evidentiary provision in arbitration agreement should have been left to arbitrator.
Scovill v. WSYX/ABC (6th Cir 10/06/2005)
http://caselaw.lp.findlaw.com/data2/circs/6th/043683p.pdf
Scovill sued the employer, asserting (among other things) age discrimination claims under the Age Discrimination in Employment Act (ADEA) and state law. The trial court granted the employer's motion to dismiss, based on its conclusion that an arbitration agreement between Scovill and the employer was enforceable. The trial court arrived at that conclusion after severing provisions of the arbitration agreement as unenforceable (including a cost-shifting provision and a provision regarding evidentiary standards). The 6th Circuit affirmed as to the cost-shifting provision but reversed as to the evidentiary provision. The court reasoned that the evidentiary provision could be interpreted by an arbitrator "in such a way as to avoid infringing upon the Plaintiff's rights," and determined that interpretation of the provision should have been left to an arbitrator under Pacificare Health Systems, Inc. v. Book, 123 S.Ct. 1531 (2003).
TX - Employees' claims against individual defendants fell within the scope of arbitration agreement.
In Re Choice Homes (Texas App Ct
09/30/2005)
Majority: http://www.lawmemo.com/docs/tx/choicemaj.htm
Concurring: http://www.lawmemo.com/docs/tx/choicecon.htm
Employees sued the employer, asserting a variety of state law claims. The employees also sued certain individual defendants. The trial court granted the employer's motion to compel arbitration of all claims against it, but denied to compel arbitration of some of the claims against individual defendants. The employer and other defendants petitioned for a writ of mandamus requiring the trial court to compel arbitration of all claims against all defendants. The court dismissed the petition as to the employer, but otherwise conditionally granted the petition. The court determined that the employer lacked standing, since it had already been granted all the relief it requested by the trial court. The court also concluded, however, that the arbitration agreement at issue covered the claims in question.
TX - Employer's problem solving procedure was not arbitration agreement.
In re Phelps Dodge Magnet Wire Co (Texas
Ct App 09/29/2005)
http://www.lawmemo.com/docs/tx/Phelps.htm
The employee sued the employer alleging retaliatory discharge and age discrimination. The trial court denied the employer's motion to compel arbitration. The Texas Court of Appeals affirmed. The issue on appeal was whether the employer's problem solving procedure (PSP) constituted an arbitration agreement or an internal grievance procedure. The court noted that the PSP provided that the entire pool of arbitrators consisted of the employer's employees and that the employer had the sole discretion to determine whether a grievance would be heard by an appeal board or a professional arbitrator. The court concluded that the PSP was a procedure for resolving internal grievances and was not an arbitration agreement.
11th - Order compelling arbitration and dismissing complaint, but retaining jurisdiction over motion for sanctions, was a final appealable order.
Jackson v. Cintas Co (11th Cir
09/21/2005)
http://caselaw.lp.findlaw.com/data2/circs/11th/0415679p.pdf
The court framed the primary issue on appeal as "whether an order compelling arbitration and dismissing a complaint, but retaining jurisdiction over a motion for sanctions, is a final and appealable decision." The court concluded that such a dismissal is a final and appealable order, since "the dismissal disposes of the entire case on the merits and the motion for sanctions raises only a collateral issue." This was an issue of first impression in the 11th Circuit.
8th - Arbitration panels' interpretation of contract was reasonable.
McGrann v. First Albany Corp (8th Cir
09/14/2005)
http://caselaw.lp.findlaw.com/data2/circs/8th/043602p.pdf
McGrann sued the employer, seeking to enforce an arbitration award rendered in his favor on his breach of contract claim. The trial court confirmed the arbitration award in its entirety. The 8th Circuit affirmed, concluding that the arbitration panel's interpretation of McGrann's contract was reasonable.
*** Arbitration - Collective Bargaining Agreements ***
11th - Norris-LaGuardia Act prohibits injunction to prevent arbitration.
Triangle
Construction v. Our Virgin Island Labor Union (11th Cir 09/14/2005)
http://caselaw.lp.findlaw.com/data2/circs/11th/0413234p.pdf
The employer filed suit, seeking an injunction to prevent arbitration of an unfair labor practice charge that was dismissed by the National Labor Relations Board (NLRB). The trial court granted the injunction. The 11th Circuit reversed.
1) The Norris-LaGuardia Act sharply limits the power of trial courts to issue injunctive relief in cases "involving or growing out of a labor dispute." 29 USC Section 104 of that act sets forth a list of disputes covered by the Norris-LaGuardia Act. The court held that the list set forth in Section 104 is not exhaustive, agreeing with the 7th and DC Circuits.
2) There are three established exceptions to the Norris-LaGuardia Act under which courts may compel arbitration, enjoin strikes undertaken in violation of an obligation to arbitrate, and enforce duties imposed by other labor statutes. The court refused to recognize an additional exception, under which a court could issue an anti-arbitration injunction. The court noted that every other circuit to consider the issue has come to the same conclusion (1st, 3rd, 7th, 9th, and 10th Circuits).
1st - Presumption in favor of postexpiration arbitration was applied.
United
Parcel Service v. Union De Tronquistas (1st Cir 10/20/2005)
http://laws.findlaw.com/1st/042275.html
The union filed a grievance for unpaid vacation time earned after expired collective bargaining agreements. The arbitrator's award was in favor of the union. The trial court refused to vacate the award. The 1st Circuit Court affirmed. The court agreed with the employer that the trial court should have initially determined the threshold question of arbitrability. The court stated there was a presumption in favor of postexpiration arbitration. The court found that because the vacation pay dispute arose under the agreement and because the agreement did not rebut the presumption of arbitrability, the merits of the union's claim must be arbitrated.
IL - Employee with CBA required to arbitrate statutory wage claims.
Kostecki
v. Dominick's Finer Foods (Illinois Ct App 09/28/2005)
(Link not available)
Kostecki, a union member with a collective bargaining agreement (CBA), sued the employer for violation of the Illinois Minimum Wage Law, the Illinois Wage Payment and Collection Act, and other state claims. The trial court granted the employer's motion to dismiss on the grounds that Kostecki was required to exhaust the remedies provided in the CBA and her claims were preempted because their resolution required interpretation of the CBA. The Illinois Appellate Court affirmed. The court stated that whether an employee subject to a CBA could enforce her statutory rights depended on the character of the claim. The court noted that the CBA's provisions covered the rates of pay, hours of work, overtime, payment of wages, and conditions of employment. The court found that the fact finder would have to construe the terms of the CBA to resolve Kostecki's claims, an activity best suited for the arbitrator.
OH - Employer waived its objection to "class" grievance.
Fostoria
v. Ohio Patrolmen's (Ohio 09/14/2005)
http://www.sconet.state.oh.us/rod/newpdf/0/2005/2005-ohio-4558.pdf
An arbitrator determined that the municipal employer violated its collective bargaining agreement (CBA) by using patrol officers to perform duties of laid off police dispatchers, and ordered the dispatchers' reinstatement. The trial court modified the award to apply only to the dispatcher who filed a grievance. The union appealed, and the appellate court below affirmed. The court reversed. The court reasoned that the parties treated the arbitration as a "class" grievance, and that the employer had waived its objection to the scope of the arbitration.
PA - Arbitration award did not preclude Human Relations Commission from adjudicating claims of discrimination (2-1).
Frog, Switch & Manufacturing v.
Human Relations Commn (Pennsylvania Cmwlth Ct 10/27/2005)
http://www.lawmemo.com/docs/pa/frog.pdf
The employee filed a complaint with the Pennsylvania Human Relations Commission (HRC) after an arbitration award reinstated the employee but did not award back pay. The HRC found the employer retaliated against the employee and ordered back pay, lost overtime pay, and interest. The Pennsylvania Commonwealth Court remanded. The issue on appeal was whether an arbitration award under a collective bargaining agreement would be given preclusive effect to proceedings before state agencies. The court found that the four prongs were met under the doctrine of issue preclusion: (1) identity of issues, (2) final judgment, (3) same parties or parties in privity, and (4) full and fair hearing. Based on prior decisions and on the HRC's power to adjudicate violations of the Pennsylvania Human Relations Act (PHRA), the court found that the General Assembly did not intend any arbitration award to have a preclusive effect on claims of discrimination brought pursuant to the PHRA. The court ordered a remand because there was a capricious disregard of overwhelming evidence that could have resulted in a contrary outcome. The DISSENT argued that since the elements of issue preclusion were met, the arbitrator's factual findings were binding on the HRC.
NY - Rescheduling was for arbitrator, not court.
Arbitration Between Stevenson and Dept
Of Correctional Services (New York App Div 09/22/2005)
http://www.courts.state.ny.us/reporter/3dseries/2005/2005_06839.htm
Stevenson sought a stay of arbitration for the reason that the arbitration was rescheduled without his consent. The trial court granted the employer's motion to dismiss. The New York Supreme Court, Appellate Division affirmed. The court found that the collective bargaining agreement (CBA) which required mutual consent to reschedule arbitration was a procedural stipulation rather than a condition precedent to arbitration. The court ruled that this was a matter for the arbitrator to resolve.
Fed - Denial of petition for attorney fees under Back Pay Act was arbitrary.
Morrison v. National Science Foundation
(Fed Cir 09/20/2005)
http://caselaw.lp.findlaw.com/data2/circs/fed/043247p.pdf
Morrison successfully challenged his suspension from federal employment. He then sought an attorney fee award under the Back Pay Act. That request was denied by an arbitrator. The Federal Circuit reversed, stating "the arbitrator may not revise the merits decision as a basis for denying attorney fees .... In doing so in this case, the arbitrator acted arbitrarily."
Employment Law Editor: Ross Runkel,
Professor of Law Emeritus.
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