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Arbitration Law Memo June 2007
by Ross Runkel at LawMemo
Arbitration Law Memo June 2007
by LawMemo - World's Best
Also available by free monthly email.
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Arbitration - Individual Contracts ***
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AR - Employment contract did not involve commerce under FAA.
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MA - Arbitration provision in assistant superintendent's contract enforced.
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MS - Sexual assault claim not arbitrable under employment agreement (8-1).
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IN - Securities fraud claims not arbitrable under employment agreement.
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PA - Agreement preserved right to judicial forum and de novo hearing.
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Arbitration - Collective Bargaining Agreements ***
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OH - Employee did not have standing to appeal arbitrator's award.
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1st - Award requiring union to collect welfare funds enforced.
*** Arbitration - Individual Contracts ***
AR - Employment contract did not involve commerce under FAA.
Arkansas Diagnostic v. Tahiri (Arkansas
05/31/2007)
http://courts.state.ar.us/opinions/2007a/20070531/06-667.pdf
Tahiri sued the employer for breach of contract and other claims. The Arkansas Supreme Court refused to compel arbitration due to lack of proof of a connection with interstate commerce. The employer argued that the Federal Arbitration Act (FAA) applied to the employment agreement. The employer claimed that it had the following interstate connections: the purchase of medical and cleaning supplies from out-of-state vendors, the receipt of payment from out-of-state insurance companies, treatment of three out-of-state patients, and payment for physician travel to out-of-state conferences. Because Tahiri's employment with the employer was not a transaction involving commerce and because the employer failed to meet its burden of demonstrating that the contract evidenced a transaction involving commerce, the court held that the matter did not fall within the ambit of the FAA. The concurring opinion stated a decision in favor of the FAA's application would virtually equate to federal preemption.
MA - Arbitration provision in assistant superintendent's contract enforced.
Polito v. School
Committee (Massachusetts Ct App 06/22/2007)
http://www.socialaw.com/slip.htm?cid=17248&sid=119
Polito sued the employer to enforce an arbitration provision in his employment contract. The trial court granted Polito's motion for summary judgment. The Massachusetts Appeals Court affirmed. Polito's contract provided that during the three-year term of the contract he was subject to discharge for good cause and was entitled to safeguards under G.L. c 71, section 41, including the right to file for arbitration, where the arbitrator's authority was limited to an award of back pay, not reinstatement. The commissioner of the Department of Education refused to appoint an arbitrator under section 41 because Polito had not served three years in his position, and the employer refused to jointly select an arbitrator. The court determined that the plain words of the employment contract granted Polito a "good cause" hearing for discharge conducted by an arbitrator whose authority was limited to back pay for the balance of the contract term. The court stated that the parties could jointly choose an arbitrator to hear this dispute.
MS - Sexual assault claim not arbitrable under employment agreement (8-1).
Smith v. Captain D's (Mississippi 06/14/2007)
http://www.mssc.state.ms.us/Images/Opinions/CO40445.pdf
Smith sued the employer for negligent hiring, supervision, and retention based upon an alleged rape by a supervisor. The trial court granted the employer's motion to arbitrate. The Mississippi Supreme Court reversed. The dispositive issue on appeal was whether the parties agreed to arbitrate the dispute, more specifically, whether the parties’ dispute was within the scope of the arbitration agreement. The court stated the question of scope was narrowed to whether Smith's rape claim arose out of or related to her application for employment, employment, and/or cessation of employment with the employer, so as to subject her sexual assault claim to arbitration. The court found that a claim of sexual assault neither pertained to nor had a connection with Smith's employment. The DISSENT argued that the issue of relation to employment was fact-intensive and required an evidentiary hearing.
IN - Securities fraud claims not arbitrable under employment agreement.
Norwood Promotional v. Roller (Indiana Ct App 06/05/2007)
http://www.in.gov/judiciary/opinions/pdf/06050702cld.pdf
Roller sued the employer, asserting tort and securities fraud claims under the Indiana Securities Act. The employer moved to compel arbitration under the parties' employment agreement, but the trial court denied the motion. The court affirmed, stating "we find that the arbitration clause must be narrowly construed to refer to the Employment Agreement alone."
PA - Agreement preserved right to judicial forum and de novo hearing.
Bucks Orthopaedic v. Ruth (Pennsylvania Sup Ct 05/30/2007)
http://www.courts.state.pa.us/OpPosting/Superior/out/a40027_06.pdf
Ruth appealed from the trial court's confirmation of an arbitration award in favor of the employer. The Pennsylvania Superior Court reversed. The arbitration agreement provided for binding arbitration and also provided "... the parties hereto reserve the right to exercise any judicial remedies by appealing such award to a court of competent jurisdiction, wherein the matter shall be heard de novo." Construing the language of the contract against the drafter (employer), the court found that the parties did not consent to final and binding arbitration, and the terms of the contract created a right to a de novo trial. The court distinguished its holding in Trombetta v Raymond James Financial Services, Inc., 907 A2d 550 (2006) (contracting parties were not free to impose their own standards of review on a court) by stating the parties here preserved their right to a judicial forum and a de novo hearing.
*** Arbitration - Collective Bargaining Agreements ***
CA - PERB had exclusive jurisdiction of labor dispute.
City of San
Francisco v. Intl Union (California Ct App 05/31/2007)
http://www.courtinfo.ca.gov/opinions/documents/A114815.PDF
The employer sued the union to compel participation in arbitration. The trial ruled that the Public Employment Relations Board (PERB) had exclusive jurisdiction. The California Court of Appeal affirmed. The employer alleged that the union refused to submit all outstanding labor disputes to binding arbitration as required by the city charter. The court concluded that the Meyers-Milias-Brown Act (MMBA) required that violations of a rule adopted by a public agency under section 3507 of the MMBA shall be processed as an unfair practice charge under Section 3509 by PERB. The court rejected the employer's argument that it not be required to exhaust its administrative remedies.
OH - Employee did not have standing to appeal arbitrator's award.
Koehring v. Ohio
Dept of Rehabilitation (Ohio Ct App 05/31/2007)
http://www.sconet.state.oh.us/rod/newpdf/10/2007/2007-ohio-2652.pdf
Koehring moved to vacate an arbitrator's award. The trial court granted the employer's motion to dismiss for lack of standing. The Ohio Court of Appeals affirmed. The court did not find that the collective bargaining agreement at issue expressly gave an aggrieved worker an independent right to submit his dispute to arbitration. The court concluded that the collective bargaining agreement at issue did not confer party status to Koehring for purposes of appealing an adverse arbitrator's award.
RI – Post-merger work assignment was arbitrable.
State of Rhode Island v. Rhode Island AFSCME (Rhode Island
06/22/2007)
http://www.courts.state.ri.us/supreme/pdf-files/06-96.pdf
The arbitrator awarded the sheriff's union extradition assignments which had been filled exclusively by the marshals after the merger of the sheriff service and the marshal service. The trial court vacated the award. The Rhode Island Supreme Court reversed. The court identified the sole issue as whether the overtime dispute was an arbitrable grievance. The court was unable to discern a direct conflict between the language of the merger statute (GL1956 section 42-11-21(c)), which set out the authority for extradition, and Articles 8.6 and 8.8 of the collective bargaining agreement (CBA) which control overtime work. The court determined the grievance was substantially arbitrable.
1st - Award requiring union to collect welfare funds enforced.
Intl Assn of Bridge Workers v. Associated Gen Contractors
(1st Cir 06/07/2007)
http://laws.findlaw.com/1st/062393.html
The arbitrator's award required the union to collect payments and to meet the bonding provisions of the collective bargaining agreement (CBA) for the welfare, health, and pension funds from all employers. The trial court enforced the award. The 1st Circuit affirmed. The court found that the obligations that the employers' associations sought to enforce for collection and bonding were explicitly set forth in the CBA, the arbitrator's decision was enforcing obligations against the union as a party to the CBA, and the powers of the trustees to manage the trust were not being curtailed or frustrated. The court rejected the union's argument that enforcement of the CBA would significantly impair competition in any relevant market.
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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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