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Arbitration Law Memo September 2007
by Ross Runkel at LawMemo
Arbitration Law Memo September 2007
by LawMemo - World's Best
Also available by free monthly email.
*** Arbitration - Individual Arbitration Agreements ***
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US - Supreme Court will decide whether contract validity issue must be sent to an arbitrator.
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9th - Arbitrators cannot ignore the preclusive effect of prior court judgments.
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10th - Employee's court claim was barred due to prior arbitration.
*** Arbitration - Collective Bargaining Agreements ***
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CA - Statute did not prohibit memo of understanding from limiting arbitrator's powers.
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NY - Taylor Law didn't preclude arbitration of dispute between public employer and union.
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PA - Interest arbitration award required employer to violate state law.
*** Arbitration - Individual Arbitration Agreements ***
US - Supreme Court will decide whether contract validity issue must be sent to an arbitrator.
Preston v. Ferrer (certiorari
granted 09/25/2007)
Case below, briefs, etc.: http://www.lawmemo.com/supreme/Preston/
Preston is a lawyer who performs management services for movie and TV performers, and Ferrer performs on TV as "Judge Alex." The contract between them contained a standard arbitration clause. When Preston commenced arbitration proceedings to collect fees allegedly owed, Ferrer sought relief from the California Labor Commissioner arguing that Preston was an unlicensed talent agent and that their agreement is void. Ferrer also sued in California court seeking to enjoin the arbitration, and Preston filed a motion to compel arbitration. The trial court enjoined the arbitration pending final resolution by the Labor Commissioner. The California Court of Appeal affirmed.
The California court held (2-1) that California's Talent Agencies Act vests exclusive original jurisdiction with the Labor Commissioner to resolve issues arising under that statute, and that the statutory administrative proceedings must be resolved before the parties may resort to another tribunal. The court rejected Preston's argument that the Federal Arbitration Act requires that the issue of the contract's validity must go to an arbitrator. The court held that Buckeye Check Cashing v. Cardegna, 126 S.Ct. 1204 (2006), did not apply because that case did not involve an administrative agency with exclusive jurisdiction over a disputed issue. The DISSENT argued that the question of the contract's validity must be decided by an arbitrator, and not by the Labor Commissioner or a court.
The US Supreme Court granted certiorari to review the judgment of the California court, and oral arguments will be scheduled for early 2008.
9th - Arbitrators cannot ignore the preclusive effect of prior court judgments.
Collins v. D R Horton (9th Cir
09/24/2007)
http://caselaw.lp.findlaw.com/data2/circs/9th/0515737p.pdf
The 5th, 6th, 7th, and 8th Circuits have concluded that arbitrators are bound by prior federal court decisions under the doctrine of collateral estoppel. The 9th Circuit agreed with that approach, holding that arbitrators "are not free to ignore the preclusive effect of prior judgments under the doctrines of res judicata and collateral estoppel." The court then addressed the more specific issue "whether arbitrators possess the same broad discretion possessed by district courts to determine when to apply offensive non-mutual collateral estoppel." Offensive non-mutual collateral estoppel arises when a plaintiff seeks to estop a defendant from re-litigating an issue which the defendant previously litigated and lost against another plaintiff. The court concluded that "arbitrators possess broad discretion to determine when they should apply offensive non-mutual collateral estoppel." The court reasoned, "[w]e discern no basis for denying arbitrators the same broad discretion possessed by district courts."
10th - Employee's court claim was barred due to prior arbitration.
Lewis v. Circuit City (10th Cir
08/31/2007)
http://caselaw.lp.findlaw.com/data2/circs/10th/053383p.pdf
Lewis sued the employer, asserting a state law claim for wrongful discharge in violation of public policy. The trial court granted summary judgment in favor of the employer. The 10th Circuit affirmed. Lewis' claim had already been litigated in arbitration - where he lost. The court concluded that 1) Lewis' claim was barred by claim preclusion because he had already arbitrated the exact same claim; 2) Lewis waived his arguments as to enforceability of the arbitration agreement; and 3) Lewis' argument that the prior arbitration award violated public policy lacked merit.
*** Arbitration - Collective Bargaining Agreements ***
CA - Statute did not prohibit memo of understanding from limiting arbitrator's powers.
Board of Trustees v. PERB
(California Ct App 09/26/2007)
http://www.courtinfo.ca.gov/opinions/documents/B189869.PDF
California Education Code Section 89542.5 requires the California State University to "establish grievance and disciplinary action procedures" for academic employees. California Government Code Section 3572.5 provides that for any memorandum of understanding between the California State University and its employees, Section 89542.5 "provides a minimum level of benefits or rights, and is superseded by a memorandum of understanding only if the relevant terms of the memorandum of understanding provide more than the minimum level of benefits or rights set forth in that section." The court held that nothing in Section 89542.5 or Section 3572.5 imposes any prohibition against limiting the powers of an arbitrator to reverse a campus president's decision on the appointment, reappointment, tenure, or promotion of an employee.
NY - Taylor Law didn't preclude arbitration of dispute between public employer and union.
Unified Court System v. Court
Attorneys (New York Sup 09/25/2007)
http://www.courts.state.ny.us/reporter/3dseries/2007/2007_27386.htm
The public employer petitioned for stay of a grievance arbitration relating to a dispute over whether certain employees were "managerial/confidential" and hence prohibited from membership in the relevant bargaining unit. The employer argued that the issue had to be determined by the Public Employee Relations Board (PERB) pursuant to Sections 205(5) and 214 of the Civil Service Law (those sections being part of Article 14, commonly referred to as the Taylor Law). The court concluded that 1) there was nothing in the cited sections of the Taylor Law prohibiting arbitration of the dispute; and 2) PERB may have had jurisdiction over the dispute, but there was nothing designating it as the exclusive forum.
7th - Trial court erred in dismissing case on its own motion, based on arbitration clause, when neither side sought to compel arbitration.
Automobile Mechanics Local 701 v.
Vanguard Car Rental (7th Cir 09/18/2007)
http://www.lawmemo.com/docs/7/701.pdf
Union pension funds sued the employer under the Employee Retirement Income Security Act (ERISA), seeking additional contributions arising from a raise in contribution rates. The trial court dismissed on its own motion for improper venue, based on its conclusion that the dispute should be arbitrated. The 7th Circuit reversed, with directions to enter judgment in favor of the employer. The court concluded that 1) the trial court's dismissal was improper, noting that the employer made no effort to compel arbitration and had in fact waived any such defense; and 2) the funds lacked authority to raise contribution rates.
8th - Retiree benefits not arbitrable because they didn't vest prior to expiration of collective bargaining agreements.
Crown Cork & Seal v. Intl Assn
of Machinists (8th Cir 0918/2007)
http://caselaw.lp.findlaw.com/data2/circs/8th/063639p.pdf
The employer filed declaratory judgment claims under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). The trial court dismissed those claims, and granted summary judgment in favor of the union on its counterclaim seeking to compel arbitration under the LMRA. The 8th Circuit reversed summary judgment and dismissed the remaining issues on appeal. The dispute arose from the employer's unilateral decision to modify health benefits for certain retirees. The court concluded that the retiree health benefits at issue did not vest prior to expiration of the relevant collective bargaining agreements and hence did not survive those agreements. Thus, the parties did not agree to arbitrate the dispute and the trial court erred in ordering arbitration. In addition, since the benefits did not vest prior to expiration of the relevant collective bargaining agreements, it was impossible for the court to grant any relief and dismissal was required.
PA - Interest arbitration award required employer to violate state law.
Dept of Corrections v. PA State
Corrections (Pennsylvania Cmwlth 09/10/2007)
http://www.courts.state.pa.us/OpPosting/CWealth/out/445CD06_9-10-07.pdf
The public employer petitioned the court, seeking to vacate an interest arbitration award setting forth the terms of a collective bargaining agreement (CBA). In relevant part, the award required the employer to provide legal representation to state corrections employees in any legal proceeding arising from employment-related conduct, even if that conduct was criminal and malicious, and to indemnify them against civil judgments resulting from such conduct. The court vacated that part of the award, concluding that it violated Chapter 30 of Title 4 of the Pennsylvania Code (a regulation with the force of law).
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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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