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Arbitration Law Memo January 2006
by Ross Runkel at LawMemo
Arbitration Law Memo - January 2006
by LawMemo - World's Best
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Arbitration - Individual Contracts ***
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OH - Arbitration agreement relaxing the standard for review of arbitration awards was unenforceable.
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AR - Arbitration agreement lacked mutuality of obligation and was unenforceable.
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OH - Arbitrator added terms to contract, so arbitration award was properly vacated by trial court.
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Arbitration - Collective Bargaining Agreements ***
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8th - Grievance of employee not in the bargaining unit was not arbitrable (2-1).
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MI - Due process prevented application of arbitration award to unions not parties in arbitration.
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CT - Grievance arbitration award reinstating police officer violated public policy.
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OH - Arbitrator's award reducing discharge to ten day suspension confirmed.
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OH - Trial court ordered to confirm arbitrator's award of reinstatement.
*** Arbitration - Individual Contracts ***
OH - Arbitration agreement relaxing the standard for review of arbitration awards was unenforceable.
Ignazio
v. Clear Channel Broadcasting (Ohio Ct App 12/16/2005)
http://www.sconet.state.oh.us/rod/newpdf/7/2005/2005-ohio-6783.pdf
Ignazio sued the employer, asserting state law claims for age and gender discrimination. The trial court granted the employer's motion to stay proceedings pending arbitration. The court reversed. The arbitration agreement at issue provided that "[a] party opposing enforcement of an award may bring a separate action in any court of competent jurisdiction to set aside the award, where the standard of review will be the same as that applied by an appellate court reviewing a decision of a trial court sitting without a jury." The court concluded that "the agreement herein is not classified as arbitration because a decision to be rendered under it would not be 'final, binding and without any qualification or condition as to the finality of the award.'" The court explained that "[a]n award is not final and binding where it provides for review by a trial court greater than that expressly set forth in the arbitration statutes." The court concluded ultimately that the agreement was not enforceable under the applicable arbitration statutes (Chapter 2711 of the Ohio Revised Code).
8th - Customer service representative for interstate transportation employer was not excluded from arbitration under FAA.
Lenz
v. Yellow Transportation (8th Cir 12/16/2005)
http://caselaw.lp.findlaw.com/data2/circs/8th/051641p.pdf
Lenz sued the employer for violation of the Iowa Civil Rights Act. The trial court denied the employer's motion to compel arbitration. The 8th Circuit Court reversed.
The issue before the court was whether Lenz, a customer service representative, was a "transportation worker" under the Federal Arbitration Act (FAA) and, thus, excluded from the provisions of the FAA. The court applied the following non-exclusive eight factor test to determine whether an employee's job duties were so closely related to interstate commerce to be excluded from the FAA: (1) whether the employee worked in the transportation industry, (2) whether the employee was directly responsible for transporting the goods in interstate commerce, (3) whether the employee handled goods that travel in interstate commerce, (4) whether the employee supervised employees who were themselves transportation workers, (5) whether the employee was within a class of employees for which special arbitration already existed when Congress enacted the FAA, (6) whether the vehicle itself was vital to the commercial enterprise of the employer, (7) whether a strike by the employee would disrupt interstate commerce, and (8) the nexus that existed between the employee's job duties and the vehicle the employee used in carrying out his duties. The court held that Lenz, a customer service representative, was not a "transportation worker" under the FAA.
AR - Arbitration agreement lacked mutuality of obligation and was unenforceable.
Asbury
Automotive Used Car v. Brosh (Arkansas 12/15/2005)
http://courts.state.ar.us/opinions/2005b/20051215/05-290.html
Brosh sued the employer for breach of contract. The trial court denied the employer's motion to compel arbitration. The Arkansas Supreme Court affirmed. The court noted that mutuality of contract required that neither was bound by an obligation unless both parties were bound. The court found that both the purchase agreement and the employment agreement granted the employer the right to seek injunctive relief in court notwithstanding the arbitration agreement and that no similar rights were granted to Brosh. The court held the arbitration agreement lacked mutuality.
9th - An employer that refuses to participate in properly initiated arbitration proceedings foregoes its right to compel arbitration.
Brown
v. Dillard's, Inc (9th Cir 12/06/2005)
http://caselaw.lp.findlaw.com/data2/circs/9th/0356719p.pdf
Pursuant to the employer's arbitration agreement, Brown filed a notice of intent to arbitrate her claim challenging her discharge. The employer refused to arbitrate, so Brown sued in state court, asserting various state law claims. The employer removed the case to federal court, and moved to compel arbitration. The trial court denied the motion. The 9th Circuit affirmed.
The trial court concluded that the arbitration agreement was unconscionable and thus unenforceable under California law. The court affirmed on other grounds, stating "we hold that when an employer enters into an arbitration agreement with its employees, it must itself participate in properly initiated arbitration proceedings or forego its right to compel arbitration." The court observed, "[i]f we took [the employer's] view and allowed it to compel arbitration notwithstanding its breach of the arbitration agreement, we would set up a perverse incentive scheme. Employers ... would have an incentive to refuse to arbitrate claims brought by employees in the hope that the frustrated employees would simply abandon them."
OH - Arbitrator added terms to contract, so arbitration award was properly vacated by trial court.
Community Memorial Hosp. v. Mattar (Ohio
Ct App 01/06/2006)
http://www.sconet.state.oh.us/rod/newpdf/6/2006/2006-ohio-25.pdf
Mattar was discharged from employment, and appealed pursuant to an arbitration clause in his employment agreement. An arbitrator found that Mattar had breached the agreement, but decided in spite of that determination that he was discharged "without cause." The trial court vacated the award, and Mattar appealed. The court affirmed, concluding that the trial court properly vacated the arbitration award. The court agreed with the trial court that "the arbitrator imposed an additional requirement which was not a term of the contract, and ... his decision ... was not based upon the essence of the contract language."
*** Arbitration - Collective Bargaining Agreements ***
8th - Grievance of employee not in the bargaining unit was not arbitrable (2-1).
IBEW
v. GKN Aerospace (8th Cir 12/19/2005)
http://caselaw.lp.findlaw.com/data2/circs/8th/041738p.pdf
The union sued the employer to compel arbitration of a grievance. The trial court compelled arbitration; the 8th Circuit reversed.
Robert Anderson was a member of the bargaining unit under two predecessor employers. He was promoted to a supervisory position and ceased being a member of the bargaining unit. The employer acquired the facility, negotiated a new collective bargaining agreement, and negotiated a separate agreement with Anderson under which he forfeited all rights associated with his former position with the former employer. Later, the employer rejected Anderson's request to return to his bargaining unit position. The union filed a grievance, and the employer refused to arbitrate the grievance.
The court held that the collective agreement was not "susceptible of an interpretation that covers" the grievance. In reaching that conclusion, the court examined the merits of the dispute to determine that it was not "'possible' for an arbitrator, consistent with the plain meaning of the agreement," to rule in favor of the union. The DISSENT argued that the majority abandoned the 8th Circuit's "long-standing approach in favor of arbitrating labor disputes, advancing its own opinion of the merits" rather than leaving that to the arbitrator.
MI - Due process prevented application of arbitration award to unions not parties in arbitration.
Detroit Chief Financial Officer v.
Policemen and Firemen (Michigan Ct App 01/12/2006)
Majority: http://www.lawmemo.com/docs/mi/detroitmaj.pdf
Concurring: http://www.lawmemo.com/docs/mi/detroitcon.pdf
The employer filed for declaratory relief against two unions to enforce an arbitration award altering the composition of a pension board. The trial court granted the unions' motion for summary disposition. The Michigan Court of Appeals affirmed. The issue on appeal was whether an arbitration award applied to unions which were not parties to the arbitration, but had the same pension board. The court stated that the mere application of an arbitration award rendered with regard to different parties deprived the defendant unions of the statutory right of arbitration that has been granted in exchange for the prohibition on labor stoppage. The court agreed that the application of the arbitration award would result in a deprivation of due process to defendant unions. The court noted: (1) the collective bargaining agreement (CBA) did not provide for the labor principle of parity with respect to the composition of the pension board, and (2) Act 312, which required compulsory arbitration, applied to the composition of the pension board because it has a significant impact upon the conditions of employment.
CA - Grievance/arbitration procedure bypassing State Personnel Board violates California Constitution.
State
Personnel Bd v. Dept of Personnel Administration (California 12/01/2005)
http://www.courtinfo.ca.gov/opinions/documents/S119498.PDF
Memoranda of understanding (MOU's) of four state employee bargaining units (comprised of firefighters, engineering and scientific technicians, craft and maintenance workers, and stationary engineers) allow employees to challenge disciplinary actions either by a) seeking review before the State Personnel Board; or b) pursuing an alternative grievance/arbitration procedure that bypasses the State Personnel Board. The state Legislature ratified the grievance/arbitration procedures set forth in the MOU's by enacting implementing legislation. The court framed the primary issue on appeal as "[d]oes this bypass of the State Personnel Board violate article VII, section 3 of the California Constitution, which provides that the State Personnel Board 'shall ... review disciplinary actions' taken against state civil service employees?" The court held that the answer to this question is "yes." The court reasoned that the pertinent portion of article VII, section 3 "preclude[s] the Legislature from authorizing some entity other than the State Personnel Board ... to review disciplinary actions taken against state civil service employees."
CT - Grievance arbitration award reinstating police officer violated public policy.
Police
Commrs of City of Ansonia v. Stanley (Connecticut
Ct App 12/27/2005)
http://www.jud.state.ct.us/external/supapp/Cases/AROap/ap92/92AP90.pdf
Stanley was ordered reinstated to his job as a police officer, pursuant to a grievance arbitration award. The trial court vacated the award, on the basis that it violated public policy. The court affirmed, stating "[w]hen a municipal employee violates the public policies enumerated in state statutes and employment regulations, a reviewing court cannot enforce an arbitral award reinstating him to employment as a police officer."
OH - Arbitrator's award reducing discharge to ten day suspension confirmed.
Fraternal
Order of Police v. Cincinnati (Ohio Ct App 12/09/2005)
http://www.sconet.state.oh.us/rod/newpdf/1/2005/2005-ohio-6514.pdf
The arbitrator's award reduced the employee's discharge to a ten day suspension. The trial court confirmed the arbitrator's award. The Ohio Court of Appeals affirmed. The court noted that they previously rejected the managerial-rights argument that the arbitrator was limited only to a determination of just cause. The court agreed with the trial court that there was a reasonable nexus between the collective bargaining agreement (CAB) and the arbitrator's award and held the award drew its essence from the CAB.
OH - Trial court ordered to confirm arbitrator's award of reinstatement.
Dayton
v. AFSCME (Ohio Ct App 12/02/2005)
http://www.sconet.state.oh.us/rod/newpdf/2/2005/2005-ohio-6392.pdf
The union appealed from the trial court's decision vacating an arbitration award that ordered the employer to reinstate the employment of a union member. The Ohio Court of Appeals reversed. The court noted that the collective bargaining agreement (CBA) did not define "just cause" and the parties had previously agreed that the just-cause issue was for the arbitrator to decide. The court stated that the essence of the arbitrator's ruling was that the employee's misconduct did not warrant discharge in light of his clean disciplinary record and the employer's failure to impose such severe punishment for similar acts of misconduct. In the court's view, the arbitrator's award was not so far afield that it could be said he exceeded his powers, or so imperfectly executed them, that a mutual, final, and definite award was not made.
IL - Union's grievance was barred by res judicata.
City
of Rockford v. Unit Six of Policemen's Assn (Illinois Ct App 12/27/2005)
http://www.lawmemo.com/docs/il/rockford.htm
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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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