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Arbitration Law Memo October 2007
by Ross Runkel at LawMemo
Arbitration Law Memo October 2007
by LawMemo - First in Employment Law
Also available by free monthly email.
*** Arbitration - Individual
Arbitration Agreements ***
*** Arbitration - Collective
Bargaining Agreements ***
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NJ - Discharge was subject to CBA's grievance procedure, in spite of individual employment contract.
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DC - Court lacked jurisdiction to review FLRA's order (2-1).
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Dist - Court affirmed vacation of arbitration award on issue not presented to arbitrator.
*** Arbitration - Individual Arbitration Agreements ***
CA - Class action waiver was unconscionable.
Murphy v. Check 'N Go (California Ct App 10/17/2007)
http://www.courtinfo.ca.gov/opinions/documents/A114442.PDF
Murphy sued in a class action, asserting wage claims under state law. The trial court denied the employer's motion to compel arbitration. The court affirmed.
The primary issue on appeal was whether a class action waiver in the employer's arbitration agreement was unconscionable. In Discover Bank v. Superior Court (2005) 36 Cal.4th 148, the court invalidated as unconscionable a class action waiver in a consumer case. The Discover Bank court concluded that a class action waiver presented in a consumer contract of adhesion is unconscionable and unenforceable in cases involving 1) small amounts of damages; and 2) allegations that the party with superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.
The court noted that Discover Bank applies "when the class action waiver is 'in practice the exemption' of defendant from responsibility because a class action would be 'the only effective way to halt and redress' the alleged violations...." Gentry v. Superior Court (2007) 42 Cal.4th 443 extended Discover Bank's rationale to wage and hour cases where a class action waiver could be "exculpatory in practical terms because it can make it very difficult for those injured by unlawful conduct to pursue a legal remedy." Under Gentry, an employee must make a factual showing as to the "real world obstacles to the vindication of class members' rights to overtime pay through individual arbitration." Such obstacles include "the modest size of the potential individual recovery, the potential for retaliation against members of the class, [and] the fact that absent members of the class may be ill informed about their rights." Applying Gentry, the court concluded that the class action waiver was unconscionable.
MT - Trial court should end its analysis after deciding that employment agreement's arbitration clause was enforceable.
Larson v. Western States Ins (Montana 10/22/2007)
http://www.lawmemo.com/docs/mt/western.pdf
Larson sought a declaratory judgment, attacking the validity of her employment contract and its arbitration and non-compete provisions. The trial court concluded that the contract and its arbitration and non-compete provisions were valid and enforceable. The court affirmed in part, reversed in part. The court agreed with the trial court that the arbitration clause was valid and enforceable, but concluded that the trial court should have ended its analysis at that point and referred the case to arbitration for consideration of other matters.
NY - Employer didn't waive its right to arbitration.
Stark v. Molod Spitz (New York 10/16/2007)
http://www.courts.state.ny.us/reporter/3dseries/2007/2007_07740.htm
Stark sued the employer, asserting (among other things) a gender discrimination claim under the New York City Human Rights Law. The trial court granted the employer's motion to compel arbitration, but the appellate court below reversed. The court reversed, concluding that the employer didn't waive its right to arbitration. The court reasoned that the employer did not "manifest an affirmative acceptance of the judicial forum" such that its "actions [were] ... inconsistent with [its] later claim that only the arbitral forum [was] satisfactory."
*** Arbitration - Collective Bargaining Agreements ***
6th - Dispute over limitations period for requesting grievance arbitration was a matter for the arbitrator. (11-4).
United SteelWorkers v. Saint Gobain Ceramics (6th Cir
en banc 10/02/2007)
http://www.ca6.uscourts.gov/opinions.pdf/07a0404p-06.pdf
The court framed the primary issue on appeal as "[d]oes a dispute over the meaning of a time-limitation bar [for requesting grievance arbitration] in a collective bargaining agreement present a threshold question for an arbitrator to resolve or for a judge to resolve?" Under John Wiley & Sons, Inc. v. Livingston, 376 US 543 (1964) and Howsam v. Dean Witter Reynolds, Inc., 537 US 79 (2002), "a time limit rule is a matter presumptively for the arbitrator, not for the judge." However, General Drivers, Warehousemen & Helpers, Local Union 89 v. Moog Louisville Warehouse, 852 F.2d 871 (6th Cir 1988) came to a contrary conclusion. Addressing a similar limitations period for requesting grievance arbitration under a collective bargaining agreement, the Moog court held that it had a duty "first" to decide whether "the union met the conditions precedent to arbitration." The 6th Circuit, sitting en banc, held that Moog was wrongly decided and overruled it. The court noted that two 6th Circuit panels had already concluded Moog was wrongly decided. The court noted that it was addressing a collective bargaining agreement that was silent as to the issue on appeal, and that parties can always agree that this issue should be decided by the court instead of an arbitrator.
The DISSENT argued that "[t]he principal difficulty with the majority opinion is that it wrongfully insulates decisions regarding arbitrability from judicial adjudication even when there is no basis for believing that the parties have contractually agreed to submit the subject matter of a particular dispute to arbitration."
NJ - Discharge pursuant to individual employment contract was not subject to CBA's grievance procedure. (3-3)
Northvale Bd v. Northvale Educ Assn (New Jersey
10/29/2007)
http://www.lawmemo.com/docs/nj/northvale.pdf
In this companion case to Pascack Valley Bd. v. Pascack Valley Staff (below), a high school employee was discharged pursuant to the terms of her individual employment contract. She was also subject to a collective bargaining agreement (CBA), so her union filed a grievance pursuant to that agreement. The employer filed suit, seeking to enjoin arbitration. The trial court granted an order enjoining arbitration, and that decision was affirmed by the appellate court below. The court affirmed, by virtue of a three-to-three split.
The court noted "[t]his matter requires us to consider circumstances we have left unanswered in our recent decisions relating to nontenured school employees whose employment rights are governed in part by individual contracts and in part by collectively negotiated agreements." The court framed the primary issue on appeal as "whether, although the individual employment contracts may be terminated on notice, and although such employees have no right to the renewal of their individual contracts, they nonetheless have a right to pursue grievance arbitration if their contracts are terminated in the middle of a contract term." The court concluded that "where the [CBA does not include a provision that] ... clearly vests an employee subject to an individual employment contract with a right to challenge a mid-term termination, on notice, of the contract through a grievance proceeding, the terms of the individual contract, otherwise in accordance with applicable statutory provisions, are enforceable as written."
NJ - Discharge was subject to CBA's grievance procedure, in spite of individual employment contract.
Pascack Valley Bd v. Pascack Valley Staff (New Jersey
10/29/2007)
http://www.lawmemo.com/docs/nj/pascack.pdf
A high school custodian was discharged from his position pursuant to the terms of his individual employment contract. He was also subject to a collective bargaining agreement (CBA), so he filed a grievance pursuant to that agreement. An arbitrator reduced the employee's discharge to a lesser form of discipline. The employer appealed, and the trial court reversed based on its determination that the arbitrator exceeded his authority. That decision was affirmed by the appellate court below. The court reversed, stating "[w]e hold that, in the particular circumstances of this matter, where the parties have agreed that the nontenured school employees may only be disciplined for just cause and have defined any dismissal as a disciplinary action subject to the grievance procedure at the employees' option, a mid-term contract termination imposed as punishment for behavior that would otherwise call for imposition of discipline falls within the collective agreement's definition of dismissal subject to the grievance procedures."
DC - Court lacked jurisdiction to review FLRA's order (2-1).
Association of Civilian Technicians v. FLRA (DC Cir
10/26/2007)
http://caselaw.lp.findlaw.com/data2/circs/dc/061354a.pdf
The issue on appeal was whether the DC Circuit had jurisdiction to review the Federal Labor Relations Authority's (FLRA) order denying the union's exceptions to the arbitrator's award denying the union's grievance. The union and the employer were unable to stipulate to the issues before the arbitrator, who then framed the issue as whether the employer violated the collective bargaining agreement (CBA) when it issued a new smoking policy letter. The arbitrator found that implementing a state-wide smoking ban was a statutory requirement and did not fall within the CBA. Because the union had chosen to file a grievance in accordance with the CBA, rather then filing an unfair labor practice charge with FLRA's general counsel, the court stated that the FLRA's order was subject to judicial review only if the order involved an unfair labor practice. The court found that the FLRA's order did not involve an unfair labor practice under the court's precedent.
The DISSENT argued that the FLRA's order involved an unfair labor practice and the court's interpretation found no support in precedent. The dissent predicted that unions will now file unfair labor practice charges with general counsel in order to preserve judicial review.
Dist - Court affirmed vacation of arbitration award on issue not presented to arbitrator.
Fairman v. District of Columbia (District of Columbia
10/25/2007)
http://www.dcappeals.gov/dccourts/appeals/pdf/02-CV-650.PDF
The trial court vacated an arbitration award determining that Fairman was entitled to severance pay. The District of Columbia Court of Appeals affirmed on other grounds. The employer agreed that the amendments to Fairman's contract were not subject to the control board's review, the ground upon which the trial court ruled. The court agreed to consider the related argument that the amendments were void against public policy because they were not approved by the District of Columbia Council, an issue not presented to the arbitrator or the trial court. The court found that multiyear contracts required Council approval under DC Code Section 1-1130(c)(3). The court affirmed the decision of the trial court and remanded for an award of severance pay under the terms of the employment contract prior to amendment.
WY - Employees' failure to file a grievance challenging their discharge didn't preclude them from suing for breach of contract.
Metz v. Laramie School Dist (Wyoming 10/23/2007)
http://courts.state.wy.us/Opinions/2007WY166.pdf
Public school district employees sued the employer after being discharged, asserting claims for breach of contract, breach of implied covenant of good faith and fair dealing, violation of their due process rights (under 42 USC Section 1983), and disparate treatment and hostile environment sexual harassment gender discrimination (under Title VII). The trial court granted summary judgment in favor of the employer. The court affirmed as to the Title VII and breach of implied covenant claims, but otherwise reversed. The court concluded that 1) there existed a genuine issue of fact as to whether the employees received sufficient notice and opportunity to be heard to comport with due process; and 2) the employees' failure to file a grievance challenging their discharge did not preclude them from suing for breach of contract, because the right of a discharged employee to file a grievance was permissive rather than mandatory.
IN - Arbitrator didn't exceed her authority when she considered unwritten attendance policy requiring progressive discipline.
Citizens Gas v. Local 1400 IBEW
(Indiana Ct App 10/04/2007)
http://www.in.gov/judiciary/opinions/pdf/10040702nhv.pdf
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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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