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Arbitration Law Memo September 2008
by Ross Runkel at LawMemo
| Arbitration Law Memo - September 2008 LawMemo First in Employment Law Arbitrator biographies and awards: National Arbitration Center |
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Arbitration - Individual Arbitration Agreements *** ***
Arbitration - Collective Bargaining Agreements ***
*** Arbitration - Individual Arbitration Agreements ***TX - Arbitration agreement limiting was unconscionable; arbitrator to decide whether cost provisions and discovery limitations were unconscionable (7-1).In
re Poly-America (Texas 08/29/2008) The employee sued the employer for violation of the retaliatory discharge provision of the Workers' Compensation Act (WCA) and sought a declaratory judgment that the arbitration agreement was unenforceable. The trial court granted the employer's motion to compel arbitration. The Texas Court of Appeals granted the employee's writ of mandamus and held the arbitration agreement unconscionable. The Texas Supreme Court affirmed in part and reversed in part. The arbitration agreement required the employee to spilt arbitration costs up to a capped amount, limited discovery, eliminated punitive damages and reinstatement remedies available under the WCA, and imposed other conditions on the arbitration process. The court concluded that permitting an employer to contractually absolve itself of the WCA statutory remedies of reinstatement and punitive damages would undermine the deterrent purpose of the WCA's anti-retaliation provisions. Because the arbitration agreement specifically provided that the arbitrator could modify unconscionable terms, the court opined that the arbitrator was better situated to determine whether the cost provisions and the discovery limitations were unconscionable as the case unfolds. The court determined under the severability provisions of the arbitration agreement that the remedies provision was easily excised from the arbitration agreement without defeating its underlying purpose. The DISSENT argued that mandamus relief was neither prudent nor appropriate. TX - Employer did not waive right to arbitration on arbitrable claims.Wee Tots v. Morohunfola (Texas Ct
App 09/18/2008) The employer sued Morohunfola for breach of the covenant not to compete and other claims. The trial court denied the employer's motion to compel arbitration of Morohunfola's counterclaims and third party claims. The Texas Court of Appeals reversed. The court stated that while the arbitration agreement did not specifically cite the Federal Arbitration Act (FAA), the express acknowledgement by Morohunfola that employment duties affect interstate commerce unambiguously implicated the FAA. The court found that the arbitration agreement required arbitration of Morohunfola's counterclaims, but did not cover the employer's claims for breach of the covenant not to compete and breach of confidentiality agreement. The court found that the actions by the employer in filing the lawsuit, engaging in discovery, and moving for partial summary judgment involved only the nonarbitrable claims. Based on these facts, the court concluded that the employer did not waive its right to compel arbitration. *** Arbitration - Collective Bargaining Agreements ***OR - Omnibus Transportation Employee Testing Act's express preemption clause didn't preempt enforcement of arbitration award.Amalgamated Transit Union v. Tri
Met (Oregon Ct App 09/09/2008) The employer (a metropolitan transit district) discharged one of its bus drivers for failing to produce sufficient urine for a drug test. An arbitrator determined that the test was flawed and should have been cancelled, and ordered the employee reinstated. The employer refused to reinstate the employee until she passed an evaluation by a substance abuse professional, so the union filed an unfair labor practice complaint with the Employment Relations Board (ERB). ERB concluded that the employer violated ORS 243.672(1)(g) by refusing to comply fully with the arbitration award. The court affirmed, concluding that ERB "did not err in determining that 49 USC Section 5331 [the express preemption clause of the Omnibus Transportation Employee Testing Act] does not preempt enforcement of the arbitration order .... " 7th - Changes to retirees' medical benefits were arbitrable.Exelon v. IBEW (7th Cir
09/02/2008) The employer sought a declaration that changes to retirees' medical benefits were not covered by the collective bargaining agreement (CBA). The trial court granted the union's motion for summary judgment, finding the dispute to be arbitrable. The 7th Circuit affirmed. The CBA's grievance procedure applied to "any dispute or difference ... between the Company and the Union or its members as to the interpretation or application of any of the provisions of this Agreement ...." The court noted the grievance procedure was not limited to employees. The court concluded that any doubt about whether the employer agreed to arbitrate disputes on behalf of retirees was resolved by application of the presumption of arbitrability. PA – Award reinstating employee who engaged in sexual harassment violated public policy.Philadelphia Housing Authority v.
AFSCME (Pennsylvania Cmwlth 09/15/2008) The public employer appealed the trial court’s decision affirming a grievance arbitration award. The award reinstated an employee discharged for engaging in sexual harassment, based on the conclusion that the employee was discharged without “just cause.” On remand from the Pennsylvania Supreme Court, the court reversed. The court reasoned that the arbitration award violated the public policy against sexual harassment in the workplace, and “so undermine[d] the stated public policy that it cannot be enforced.” The court noted that the Arbitrator determined the employee “repeatedly and egregiously sexually harassed” his co-worker – but found “just cause” lacking anyway. Fed - Suspension consisting of "credit for time served" was arbitrary.Greenstreet v. Social Security
(Fed Cir 09/24/2008) Greenstreet was discharged from his federal job. An arbitrator ordered him reinstated without backpay, which essentially amounted to a suspension consisting only of "credit for time served." Greenstreet appealed, arguing that the length of the suspension was arbitrarily determined by the amount of time the arbitrator took to issue a decision. The Federal Circuit vacated in part and remanded for consideration of the appropriate length of Greenstreet's suspension. Consistent with the approach taken by the Merit Systems Protection Board (MSPB), the court held that "the length of a suspension is arbitrary when it is based solely on the suspended employee's 'time served' awaiting decision." MA - Court confirms award reinstating teachers who were discharged for "failure to demonstrate fluency in English."School Committee v. Oung
(Massachusetts Ct App 09/25/2008) The employer (a public school district) appealed the trial court's judgment confirming an arbitration award reinstating three employees (teachers) with backpay. The employees had been discharged for "failure to demonstrate fluency in English." The court affirmed, concluding that (among other things) the arbitrator's exclusion of English-fluency test results "did not constitute a refusal to receive material information." The court reasoned that exclusion of the test results "did not constitute an arbitrary refusal but rather a reasonable precaution against unreliability." TX - Back-pay award under Civil Service Act subject to offsets.City
of Temple v. Taylor (Texas Ct App 08/27/2008) Taylor
sued the employer seeking the full amount of back pay during the time he
was suspended. The trial court granted Taylor's motion for summary
judgment. The Texas Court of Appeals reversed. The sole issue on appeal
was whether the arbitrator's award of back pay to Taylor under the Civil
Service Act (CSA) should be reduced by the amount he earned from other
sources. The court noted that section 143.053(f) of the CSA did not
specifically address whether back-pay awards were to be offset by income
earned from other sources during suspension, but merely stated that the
officer was "entitled to ... full compensation" for the time
lost. Finding that allowing Taylor to keep income earned from outside
sources would result in a windfall recovery that violated the purpose of
subsection (f), the court held that a calculation of "full
compensation" under section 143.053(f) necessarily included offsets. 7th - Employer was entitled under Fed.R.Civ.P. 60(b) to relief from judgment inconsistent with subsequent grievance arbitration award.Ameritech v. IBEW (7th Cir
09/10/2008) The employer and union submitted to grievance arbitration a dispute that had already resulted in two inconsistent arbitration awards (the first in favor of the employer and the second in favor of the union) and subsequent pending litigation. The latest arbitration arose from a settlement agreement, whereby the parties agreed to submit their dispute to arbitration a third time for "final resolution" of the conflict. The arbitrator ruled in the employer's favor, and the employer moved to vacate the earlier adverse judgment pursuant to Fed.R.Civ.P. 60(b). The trial court denied the motion because the appeals arising from the two prior arbitration awards were still pending. The 7th Circuit dismissed those two pending appeals, based on the parties' settlement, and concluded that the employer was entitled to relief under Rule 60(b) based on that settlement and the fact that the third award was inconsistent with the second.
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Employment Law Editor: Ross Runkel,
Professor of Law Emeritus.
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
