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Arbitration Law Memo April 2008
by Ross Runkel at LawMemo
Arbitration Law Memo April 2008
by LawMemo - First in Employment Law
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Arbitration - Individual Arbitration Agreements ***
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Arbitration - Collective Bargaining Agreements ***
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3rd - Denial of disability benefits under ERISA plan not subject to CBA's grievance procedure.
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PA – Grievance arbitration award was rationally derived from, and drew its essence from, CBA.
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7th – National Railroad Adjustment Board violated union's due process rights.
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9th - Portal-to-Portal Act waived federal government's sovereign immunity as to overtime claims.
*** Arbitration - Individual Arbitration Agreements ***
CA – Employee signed, but did not agree to arbitrate his claims.
Metters v. Ralphs Grocery
(California Ct App 04/01/2008)
http://www.courtinfo.ca.gov/opinions/documents/G038380.PDF
Metters sued the employer, asserting race discrimination claims under California's Fair Employment and Housing Act (FEHA). The trial court denied the employer's motion to compel arbitration. The California Court of Appeal affirmed, agreeing with the trial court that there had been no agreement to arbitrate. Metters claimed that he never knew he had entered into an arbitration agreement. In turn, the employer relied upon the general rule that "ordinarily, one who signs an instrument which on its face is a contract is deemed to assent to all its terms. A party cannot avoid the terms ... on the ground that he or she failed to read it before signing." However, the court relied upon an exception to that general rule that applies "when the writing does not appear to be a contract and the terms are not called to the attention of the recipient." The court noted that when the exception applies "no contract is formed with respect to the undisclosed term[s]."
3rd - Case remanded for reconsideration of whether employer waived its right to arbitration by virtue of its litigation conduct.
Zimmer v. Cooperneff Advisors (3rd
Cir 04/14/2008)
http://caselaw.lp.findlaw.com/data2/circs/3rd/051119p.pdf
Zimmer sued the employer, asserting claims for copyright infringement, defamation, conversion, tortious interference with contractual relations, and misappropriation of trade secrets. The employer moved to compel arbitration, but the trial court denied that motion. The 3rd Circuit reversed. The trial court concluded that the parties' arbitration agreement was unconscionable, and that the employer waived its right to arbitration. The court found that 1) the parties' arbitration agreement was not procedurally unconscionable (a prerequisite for a finding of unconscionability under Pennsylvania law), and the trial court thus erred in finding the agreement to be unconscionable; and 2) the trial court erred in its analysis of waiver. The court remanded for reconsideration of whether the employer waived its right to arbitration by virtue of its litigation conduct, under the factors set forth in Hoxworth v. Blinder, Robinson & Co., Inc., 980 F.2d 912 (3rd Cir 1992).
*** Arbitration - Collective Bargaining Agreements ***
3rd - Denial of disability benefits under ERISA plan not subject to CBA's grievance procedure.
United Steelworkers v. Rohm and
Hass (3rd Cir 04/14/2008)
http://caselaw.lp.findlaw.com/data2/circs/3rd/064346p.pdf
Employees challenged the denials of their claims for disability benefits under their employer's Employee Retirement Income Security Act (ERISA) plan. The primary issue on appeal was whether those challenges were subject to the grievance procedure contained in a totally separate collective bargaining agreement (CBA) between the employer and the union. The 3rd Circuit held that "there is no right to arbitration of ERISA benefits under a CBA unless the ERISA benefits sought are either (i) derived directly from an ERISA plan established and maintained by or incorporated into a CBA whose grievance procedure contains an arbitration clause, or (ii) created by a separate ERISA plan and that plan and/or the CBA provide that adverse benefit determinations by a plan administrator are subject to the CBA's grievance procedure that includes arbitration."
The court explained "[w]e do not purport to hold that benefits provided pursuant to ERISA can never be subject to the grievance or arbitration provision contained within a CBA. Indeed, the regulations governing ERISA specifically contemplate that an ERISA plan may be established or maintained pursuant to a CBA and set forth separate guidelines for such plans." The court noted, however, that in this case neither the plan nor the CBA referenced each other. Since the requisite relationship between the plan and the CBA did not exist, the court held that the plan's denial of benefits was not subject to the CBA's grievance procedure.
PA – Grievance arbitration award was rationally derived from, and drew its essence from, CBA.
County of Mercer v. Teamsters
(Pennsylvania Cmnwlth Ct 04/08/2008)
http://www.courts.state.pa.us/OpPosting/CWealth/out/2405CD06_4-8-08.pdf
The public employees' union appealed from the trial court's decision vacating an interest arbitration award rendered in the union's favor. The court reversed, concluding that the arbitration award "was rationally derived from and drew its essence from the CBA and did not violate public policy." The court noted that the trial court had applied the "core function test" - which has been overruled.
7th – National Railroad Adjustment Board violated union's due process rights.
Brotherhood of Locomotive v. Union
Pacific (7th Cir 04/09/2008)
http://caselaw.findlaw.com/data2/circs/7th/062542p.pdf
The union representing aggrieved railroad employees appealed the National Railroad Adjustment Board's (NRAB's) dismissal of its Railway Labor Act (RLA) claims for lack of jurisdiction. The trial court affirmed the NRAB's decision. The 7th Circuit reversed, concluding that the union's due process rights were violated by the NRAB when (unbeknownst to the union) it created a new requirement that the union had to present evidence of a pre-arbitration settlement conference in the "on-property" record.
11th – Union failed to file enforcement action within two year statute of limitations for arbitration awards under RLA.
Brotherhood of Locomotive
Engineers v. CSX (11th Cir 04/04/2008)
http://caselaw.findlaw.com/data2/circs/11th/0712624p.pdf
The union sought enforcement of an arbitration award. The trial court dismissed the union’s petition. The 11th Circuit affirmed.
The issues on appeal were: (1) when did an enforcement action accrue under the Railway Labor Act’s (RLA) two year statute of limitations for an arbitration award, and (2) whether a request for interpretation of an arbitration award tolled the limitations period. The court followed the literal and strict interpretation of the 4th and 7th circuits finding that 45 USC Section 153 First (r) required that the cause of action accrued within the time limit set in the arbitration award, which, in this case, was 30 days. The court noted that the union could have pursued an interpretation of the arbitration award while it sought to enforce the award. The court concluded that the union’s request for interpretation of the arbitration award did not justify equitable tolling because the union had not met its burden of showing that extraordinary circumstances existed.
9th - Portal-to-Portal Act waived federal government's sovereign immunity as to overtime claims.
Dept of Treasury v. FLRA (9th Cir
04/03/2008)
http://caselaw.lp.findlaw.com/data2/circs/9th/0576031p.pdf
The federal employer petitioned for review of a Federal Labor Relations Authority (FLRA) order. Pursuant to that order, the employer was found to have committed an unfair labor practice by failing to comply with terms of an arbitration award relating to Portal-to-Portal Act overtime violations. The 9th Circuit denied the petition and granted the FLRA's cross-petition for enforcement.
The employer asserted that it was entitled to sovereign immunity as to any alleged violations of the Portal-to-Portal Act. The court rejected that assertion, holding that the federal government waived sovereign immunity under the Portal-to-Portal Act. Unlike the Fair Labor Standards Act (FLSA), the Portal-to-Portal Act contains no express waiver of sovereign immunity. The court reasoned that "[b]ecause the Portal-to-Portal Act's remedies for overtime are found within the FLSA, and no party disputes that the FLSA waives sovereign immunity, the FLRA properly determined that the United States waived sovereign immunity."
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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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