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Arbitration Law Memo May 2006
by Ross Runkel at LawMemo
Arbitration Law Memo May 2006
by LawMemo - World's Best
Also available by free monthly email.
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Arbitration - Individual Contracts ***
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CA - California Supreme Court will decide on class action waiver legality.
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5th - USERRA did not preclude enforcement of arbitration agreement.
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Arbitration - Collective Bargaining Agreements ***
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5th - Bargaining experience was not admissible where CBA was unambiguous.
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NJ - Employer can deduct withholding taxes from back pay award.
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NY - Arbitrator did not exceed authority modifying employee's discharge to suspension without pay.
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6th - Dispute was a "minor dispute" under Railway Labor Act.
*** Arbitration - Individual Contracts ***
CA - California Supreme Court will decide on class action waiver legality.
Gentry v. Superior Court (Circuit City Stores)
Press release: http://www.courtinfo.ca.gov/courts/supreme/summaries/WS042406.PDF
Decision below: Gentry v. Superior Court (California Ct App 01/19/2006)
http://caselaw.findlaw.com/data2/californiastatecases/B169805.PDF
Gentry sued the employer in a putative class action, asserting claims for violations of state statutes. The claims arose from the employer's alleged misclassification of Gentry and others as "exempt" managerial or executive employees not entitled to overtime pay. The trial court granted the employer's petition to compel arbitration pursuant to the employer's arbitration agreement. Since the agreement contained a provision waiving Gentry's right to pursue a class action, the trial court ordered Gentry to arbitrate on an individual basis.
On remand from the California Supreme Court for reconsideration in light of Discover Bank v. Superior Court 36 Cal. 4th 148 (2005), the Court of Appeal concluded that the class action waiver was not unconscionable, and was enforceable. The California Supreme Court will now review that decision.
5th - USERRA did not preclude enforcement of arbitration agreement.
Garrett v. Circuit City Stores (5th Cir 05/11/2006)
http://caselaw.lp.findlaw.com/data2/circs/5th/0411360cv0p.pdf
Garrett sued the employer for violation of USERRA. The trial court denied the employer's motion to compel arbitration, ruling that USERRA overrode the enforcement of the arbitration agreement. The 5th Circuit reversed, stating that the arbitration agreement was enforceable unless Garrett could demonstrate that Congress intended to preclude arbitration. Garrett argued that a "right or benefit provided by" USERRA included plaintiff's right to bring suit in federal court (38 USC Sections 4302(b) and 4323(a)(2)). The court found the defined substantive rights of USERRA related to compensation and working conditions, not to affording an exclusive judicial forum for dispute resolution. The court declined to conclude that Congress intended to exclude all arbitration under USERRA based on one piece of legislative history from the House Report which indicated that arbitration decisions shall not be binding as a matter of law. The court stated that arbitration under the employer's rules had not been shown by Garrett to fail to allow a fair opportunity to present his claims.
8th - NASD rules didn't override arbitration agreement.
ING Financial Partners v. Johansen (8th Cir 05/01/2006)
http://caselaw.lp.findlaw.com/data2/circs/8th/052531p.pdf
Johansen commenced arbitration of gender discrimination, sexual harassment, and whistleblower claims against the employer. The employer filed suit, seeking to enjoin arbitration on the ground that it hadn't agreed to arbitrate Johansen's claims. The trial court granted summary judgment in favor of the employer and permanently enjoined Johansen from arbitrating her claims. The 8th Circuit reversed. The trial court concluded that the parties' arbitration agreement "effectively incorporated" the National Association of Securities Dealers (NASD) rules, which require consent for arbitration of statutory employment discrimination claims. The 8th Circuit reasoned that the trial court erred in concluding that NASD Code Rule 10201(b) overrode the parties arbitration agreement, noting that the agreement "provided for arbitration between the parties and referenced the NASD procedural rules for the purpose of indicating how the arbitration would be conducted."
*** Arbitration - Collective Bargaining Agreements ***
CA - Promotion policy was not subject to arbitration.
San Francisco Fire Fighters v. City and County of San
Francisco (California 05/18/2006)
http://www.courtinfo.ca.gov/opinions/documents/S131818.PDF
A provision of the Charter of the City and County of San Francisco requires disputes between the employer and unions representing firefighters and other public safety officers to be submitted to binding arbitration in the event the parties bargain to impasse. An exception to this binding arbitration requirement applies to the implementation of any rule or policy "necessary to ensure compliance with ... anti-discrimination laws." S.F. Charter, Section A8.590-5(g)(3). After the employer implemented a new procedure for determining promotions, the union filed a petition for writ of mandate to compel arbitration. The trial court denied the petition, but the appellate court below reversed. The California Supreme Court reversed, concluding that the new rule was reasonably related to ensure compliance with anti-discrimination laws as required under Section A8.590-5(g)(3). The court also concluded that Section A8.590-5(g)(3) gives the employer considerable discretion to determine what is necessary to ensure compliance with anti-discrimination laws.
5th - Bargaining experience was not admissible where CBA was unambiguous.
Paper
Workers
v. ExxonMobil Refining & Supply (5th Cir 05/10/2006)
http://caselaw.lp.findlaw.com/data2/circs/5th/0520281cv0p.pdf
The union sued the employer to enforce the arbitration provision of the collective bargaining agreement (CBA). The trial court compelled arbitration. The 5th Circuit affirmed. The court noted that in this circuit evidence of bargaining experience could be introduced only where the contract language was ambiguous as to arbitrability. The court found that the union's claim that the employee's discharge was for unjust cause was a claim that was arbitrable on its face because it required interpretation of the CBA'S article VI which provided that an employee could be discharged for just cause. The court declined to change its rule on bargaining experience where the terms of the CBA were unambiguous. The court pointed out that bargaining experience was not the most forceful evidence where the union's claim was that the employer discriminated against the employee because of a disability.
NJ - Employer can deduct withholding taxes from back pay award.
Amalgamated Transit Union Local 880 v. NJ Transit Bus
Operations (New Jersey App Div 05/08/2006)
http://www.judiciary.state.nj.us/opinions/a3139-04.pdf
The court framed the primary issue on appeal as "whether an employer may deduct state and federal withholding taxes from back pay arbitration awards when a union employee is reinstated." The court held that the answer to that question is "yes." Adopting the analysis set forth in Soc. Sec. Bd. v. Nierotko, 327 US 358 (1946), the court reasoned that "the test we apply is whether the employees are being paid as a consequence of the existing employer-employee relationship, not whether they actually performed services for the employer for the back pay period."
PA - Court declines to vacate award on substitute teachers.
Somerset Area School District v. Somerset Area Educ Assn
(Pennsylvania Cmwlth 05/08/2006)
http://www.courts.state.pa.us/OpPosting/CWealth/out/663CD05_5-8-06.pdf
The employer/school district appealed from the trial court's denial of its petition to vacate a grievance arbitration award rendered in the union's favor. The award determined that the employer violated its collective bargaining agreement (CBA) by failing to recognize "long term substitute teachers" as part of the bargaining unit established by the Pennsylvania Labor Relations Board (PLRB). The court affirmed, stating "[i]t certainly cannot be said that the Arbitrator's award may not rationally be derived from the CBA or that it indisputably and genuinely is without foundation in or fails to logically flow from the CBA."
7th - Interested unions in work assignment dispute were not entitled to participate as partisan members of public law board under RLA.
IBEW v. CSX (7th Cir 05/04/2006)
http://caselaw.lp.findlaw.com/data2/circs/7th/052590p.pdf
The electrician union (IBEW) sought review of an arbitration award which concluded that a collective bargaining agreement (CBA) required assignment of the work to the railroad signalmen union by the railroad employer. The trial court granted the signalmen union's motion for summary judgment. The 7th Circuit affirmed. The court noted that work assignment disputes were fairly common in the context of railroad arbitrations. The court stated that the participatory structure envisioned by the Railroad Labor Act (RLA) required the disputing union and carrier to participate as partisan members but did not envision partisan membership for other interested unions in a voluntary public law board pursuant to 45 USC Section 153 Second. The court found that the IBEW's due process rights were satisfied by the opportunity to be heard by the public law board.
NY - Arbitrator did not exceed authority modifying employee's discharge to suspension without pay.
North Country Community College Assn Of Professionals v.
North Country Community College (New York App Div 05/04/2006)
http://www.courts.state.ny.us/reporter/3dseries/2006/2006_03491.htm
The arbitrator modified a teacher's discharge to a suspension without pay and anger management counseling. The trial court confirmed the award. The New York Supreme Court, Appellate Division affirmed. The court found that, in the absence of a specifically enumerated limitation on the arbitrator's authority to fashion a remedy short of dismissal, the trial court properly concluded that the arbitrator did not exceed his authority in imposing a penalty of suspension and anger management counseling after he determined that there was not just cause for dismissal.
6th - Dispute was a "minor dispute" under Railway Labor Act.
Intl Brotherhood of Teamsters v.
United Parcel Service (6th Cir 04/26/2006)
http://caselaw.lp.findlaw.com/data2/circs/6th/055478p.pdf
The union sued the employer,
seeking a declaratory judgment and injunctive relief under Section 3 of the
Railway Labor Act (RLA). The union
alleged that the employer violated Section 2 of the act when it refused to
recognize the union's choice for chairman of a safety committee established by
collective bargaining agreement. The
trial court dismissed the case, concluding that it fell within the exclusive
jurisdiction of the adjustment board. The
6th Circuit affirmed, concluding that this was a "minor dispute"
subject to the exclusive jurisdiction of the adjustment board.
The court reasoned that "the union has construed the board's
exclusive jurisdiction in Section 3 too narrowly and the term 'representatives'
in Section 2, Third too broadly...."
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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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