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Arbitration Law Memo - March 2009
by Ross Runkel at LawMemo
| Arbitration Law Memo - March
2009 LawMemo First in Employment Law Arbitrator biographies and awards: National Arbitration Center |
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Arbitration - Individual Arbitration Agreements ***
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Arbitration - Collective Bargaining Agreements ***
*** Arbitration - Individual Arbitration Agreements ***CA - Class arbitration waiver was contrary to public policy.Sanchez
v. Western Pizza (California Ct App 03/17/2009) Sanchez sued the employer in a putative class action, asserting various claims under California wage-and-hour laws. The employer moved to compel arbitration, but the trial court denied the motion. The court affirmed, concluding that 1) the enforceability of the employer’s arbitration agreement was a matter for the court (not the arbitrator) to decide; 2) the arbitration agreement’s class arbitration waiver was contrary to public policy and hence unenforceable; and 3) the arbitration agreement as a whole was unconscionable. CA – Class arbitration waiver was unconscionable as to meal and rest period claims.Franco
v. Athens Disposal (California Ct App 03/10/2009) Franco sued the employer in a class action, asserting claims for violation of several provisions of state wage-and-hour laws. The employer petitioned to compel arbitration, which was granted by the trial court. The court reversed. The employer’s arbitration agreement contained a provision waiving class-wide arbitration and precluding employees from acting in “a private attorney general capacity.” The court concluded that the arbitration provision was “unconscionable with respect to the alleged violations of the meal and rest period laws given ‘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.’” The court further concluded, “because the arbitration agreement prevents plaintiff from acting as private attorney general, it conflicts with the Labor Code Private Attorneys General Act of 2004...” With respect to the first conclusion, the court relied primarily upon application of the analysis set forth in Gentry v. Superior Court (2007) 42 Cal.4th 443. *** Arbitration - Collective Bargaining Agreements ***NE – Court recognizes public policy as grounds for vacating arbitration awards in Nebraska.State
v. Henderson (Nebraska 02/27/2009) Henderson was discharged from his job as a state police officer after it was learned he belonged to a group related to the Ku Klux Klan. Grievance arbitration resulted in his reinstatement . The trial court reversed on the basis that the arbitration award violated public policy. The court affirmed. The court had not previously addressed whether Nebraska law allows an arbitration award to be vacated on public policy grounds. Taking the opportunity to address that issue here, the court held “a court may refuse to enforce an arbitration award that is contrary to a public policy that is explicit, well defined, and dominant.” The court explained, “such a public policy must be ascertained by reference to laws and legal precedents, not from general considerations of supposed public interests, but the arbitration award need not itself violate positive law to be unenforceable as against public policy.” The court concluded that “an explicit, well-defined, and dominant public policy of Nebraska” is that “the laws of Nebraska should be enforced without racial or religious discrimination.” The court also concluded that “more importantly, this public policy incorporates, and depends upon, the public’s reasonable perception that the laws are being enforced without discrimination.” The court determined ultimately that this public policy was violated by the arbitration award reinstating Henderson. IL – Court recognizes a public policy in favor of the safety of school children.Central
Community School v. IELRB (Illinois Ct App 02/27/2009) The employer discharged a custodian for losing his temper in front of students on several occasions. An arbitrator ordered the employee reinstated, but the employer refused to comply with that. The Illinois Educational Labor Relations Board (IELRB) found the employer in violation of the Illinois Educational Labor Relations Act (IELRA) based on its refusal to comply with the arbitration award. The court reversed the IELRB’s order, with directions to remand the matter for reconsideration by the arbitrator. The court noted, “we find support for the proposition there is a general policy in favor of the safety of school children in section 24-24 of the School Code.” The court determined that this public policy provided a basis sufficient to yield an arbitration award unenforceable. The court remanded for consideration by the arbitrator of certain conduct relevant to this public policy. WA –Employer sanctioned for seeking to enjoin grievance arbitration.Highland
School Dist v. Racy (Washington Ct App 03/17/2009) The public employer appealed the trial court’s order imposing sanctions, based on the trial court’s determination that the employer’s action was frivolous. The court affirmed. The employer had filed this action seeking to enjoin arbitration of grievances relating to non-renewal of two teachers’ coaching contracts. The trial court concluded that the relief sought by the employer was precluded by Mount Adams School District v. Cook, 81 P3d 111 (2003). The court agreed with the trial court’s conclusion, and found that the trial court didn’t abuse its discretion in sanctioning the employer. 9th - Trial court lacked subject matter jurisdiction under LMRA.Int'l Union Of Engineers v. County
of Plumas (9th Cir 03/20/2009) The union sued to compel arbitration in state court. The employer removed the case to federal court. The trial court ordered arbitration. The 9th Circuit reversed. The court stated that the employer could raise jurisdictional challenges at any time. Because the county was not an employer under the Labor Management Relations Act (LMRA) and the claims did not arise under the Constitution or federal law, the court concluded that the trial court lacked subject matter jurisdiction. 7th – Court confirmed award finding lack of just cause.Clear
Channel v Int'l Unions of Painters (7th Cir 03/12/2009) The employer appealed the trial court’s order that confirmed a grievance arbitration award reinstating an employee. The 7th Circuit affirmed. The employer discharged the employee for committing a serious safety violation, but the arbitrator concluded that the employer lacked “just cause” to support the discharge. The arbitrator found that the employee committed the violation, but reduced the penalty to a six-month suspension without pay. The court concluded that the arbitrator’s decision “drew its essence” from the parties’ collective bargaining agreement. The court explained that the arbitrator’s decision “was tethered to the language of the agreement, ...set forth an arguable construction of the agreement, and...applied that interpretation to the facts that the parties submitted.” The court observed that the employer “relies on a line of cases from other circuits holding that once an arbitrator finds that a violation has occurred for which the contract language authorizes discipline up to and including termination at the employer’s discretion, the arbitrator necessarily may not review the propriety of the employer’s decision to fire the offending employee rather than imposing lesser discipline.” The court also observed, however, that “this circuit has never embraced that line of authority.” The court noted that this was a case where the arbitrator had found just cause to be lacking, not a case where the arbitrator had found just cause but decided upon a lesser form of discipline. OH - Call-in triggered call-in pay for SWAT team under CBA.City
of Cleveland v. Cleveland Police Assoc (Ohio Ct App 03/12/2009) The employer appealed the trial court's order confirming an arbitration award for call-in pay. The Ohio Court of Appeals affirmed. Special Weapons and Tactical Unit (SWAT) employees were called in to respond to an emergency which was cancelled within ten minutes. The collective bargaining agreement's (CBA) provision for call-in pay required four hours of pay at one and one-half the regular rate of pay. The court found that the record was clear that the arbitrator applied the clear terms of the CBA to the facts in this case. The court noted that if the employer did not want the call-in to trigger the call-in pay, the employer must negotiate new terms in the CBA. 1st - Arbitrator's remedy of reinstatement was not affected by wrongful discharge statute.Asociacion de Empleados v. Union
Internacional (1st Cir 03/06/2009) The
trial court vacated that portion of an arbitration award which awarded five
discharged employees back pay and reinstatement. The 1st Circuit affirmed.
The employees were discharged for erasing records of loans made to
themselves. The arbitrator found the employees were unjustly discharged. The
issue on appeal was whether Puerto Rico Law 80, which limited damages in
wrongful discharge cases to severance pay and attorney fees only, applied to
a collective bargaining agreement (CBA) which explicitly provided for
reinstatement. The court had previously ruled that when an arbitrator found
a violation of the CBA which was independent of Law 80, reinstatement was
appropriate under the CBA. Since it was not clear whether the arbitrator was
applying the CBA or Law 80 in this case, the court concluded it was
constrained from overturning the remedy.
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Employment Law Editor: Ross Runkel,
Professor of Law Emeritus.
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