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Arbitration Law Memo - April 2009
by Ross Runkel at LawMemo
| Arbitration Law Memo - April 2009 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 ***
5th
- Plaintiff waived her right to arbitration.
Nicholas
v. KBR (5th Cir 04/15/2009) Nicholas
sued the employer, alleging that it breached a severance agreement with her
deceased husband when it failed to pay his life insurance benefits.
She amended her complaint after the trial court determined that her
claim was completely preempted under 29 USC Section 1132(a)(1)(B) of the
Employee Retirement Income Security Act (ERISA).
During discovery, Nicholas moved to compel arbitration pursuant to
the severance agreement. The trial court denied the motion, based on its conclusion
that Nicholas waived her right to arbitration.
The 5th Circuit affirmed. Waiver
of arbitration will be found when "the party seeking arbitration
substantially invokes the judicial process to the detriment or prejudice of
the other party." The
court concluded that "the act of a plaintiff filing suit without
asserting an arbitration clause constitutes substantial invocation of the
judicial process, unless an exception applies."
The court noted, "[w]e emphasize that the legal standard for
waiver is the same regardless of which party is the party alleged to have
waived arbitration." Applying
that standard, the court determined ultimately that no exception was
applicable in this case, that the employer had been prejudiced, and that
Nicholas waived her right to arbitration. WI
- Arbitrator didn't manifestly disregard the law by ordering reinstatement
when employee didn't request it.
Sands
v. Menard (Wisconsin Ct App 04/14/2009) An
arbitrator found that the employer violated the Equal Pay Act (EPA), Title
VII, and state law by paying Sands (a female attorney) less than male
comparators and then discharging her in retaliation for exercising her
statutory rights. The
arbitrator awarded damages and reinstatement.
The employer sought to vacate the portion of the award ordering
reinstatement, arguing that the arbitrator manifestly disregarded the law.
The trial court denied the motion to vacate. The court affirmed, concluding that the arbitrator didn't
manifestly disregard the law by ordering reinstatement in spite of the fact
Sands didn't request it. CA
- Arbitration agreement imposed mutual obligations on employee and employer
to arbitrate their claims.
Roman
v. Superior Court (California Ct App 04/13/2009) Roman
sued the employer, asserting disability discrimination and retaliation
claims under California's Fair Employment and Housing Act (FEHA), as well as
a common law claim for wrongful discharge in violation of public policy.
The trial court granted the employer's motion to compel arbitration,
so Roman petitioned for a writ of mandate.
The court denied the petition, based principally on its conclusion
that the arbitration agreement was not substantively unconscionable.
The arbitration agreement stated in relevant part, "I agree, in
the event that I am hired by the company, that all disputes and claims that
might arise out of my employment with the company will be submitted to
binding arbitration." The
court determined that this provision obligated both the employer and its
employees to arbitrate their claims. The
court thus rejected Roman's argument that the agreement imposed a unilateral
obligation upon employees to arbitrate their claims. AK
- Court remanded for arbitration, if employer paid arbitration costs.
Gibson
v. Nye Frontier Ford (Alaska 04/03/2009) Gibson
sued the employer for overtime compensation under the Alaska Wage and Hour
Act (AWHA). The trial court granted the employer's motion to compel
arbitration. The Alaska Supreme Court reversed and remanded, giving the
employer the option to pay for the arbitration. After finding that the
employer could not unilaterally change the arbitration agreement and after
severing the unconscionable $50,000.00 appellate threshold provision, the
court concluded that requiring Gibson to pay half the costs of arbitration
was inconsistent with the AWHA. The court stated the objective of the AWHA
was to protect the health, efficiency, and general well-being of workers;
and to achieve this end, the AWHA contained provisions that were designed to
deter employers from violating the act and to encourage employees to take
action to remedy violations. The court opined that imposing substantial
forum costs would run counter to the latter strategy. 3rd
- Explicit agreement is essential to the formation of an arbitration
contract.
Kirlies
v. Dickie, McCamey & Chilcote (3rd Cir 03/24/2009) Kirlies
sued the employer, asserting various claims under Title VII, the
Pennsylvania Human Relations Act, and the Fair Labor Standards Act (FLSA).
The employer moved to compel arbitration, but the trial court denied
the motion. The 3rd Circuit
affirmed, concluding that Kirlies did not agree under Pennsylvania law to
arbitrate her claims. The
employer argued that arbitration provisions were present in its corporate
bylaws, and that Kirlies was properly charged with knowledge of those as a
shareholder/director. The court
rejected that argument, noting that "under Pennsylvania law, explicit
agreement is essential to the formation of an enforceable arbitration
contract." CA
- Class action waiver clause was unconscionable.
Olvera
v. El Pollo Loco (California Ct App 04/27/2009) Olvera
sued the employer in a class action, asserting various state law wage and
hour claims. The employer moved
to compel arbitration, but the trial court denied the motion. The court affirmed, concluding that the employer's
arbitration agreement - which contained a class action waiver clause - was
unconscionable. The court said it did not need to decide whether the class
action waiver was unenforceable under the framework of Gentry
v. Superior Court 42 Cal.4th 443 (2007). ***
Arbitration - Collective Bargaining Agreements ***
US
Supreme Court: A provision in a collective bargaining agreement that clearly
and unmistakably requires union members to arbitrate ADEA claims is
enforceable as a matter of federal law (5-4).
14
Penn Plaza v. Pyett (US Supreme Court 04/01/2009) The
relevant collective bargaining agreement requires union members to submit
all claims of employment discrimination to binding arbitration under the
CBA's grievance and dispute resolution procedures. A number of employees
asked the union to file grievances alleging, among other things, that the
employers violated the CBA's ban on workplace discrimination by reassigning
them on the basis of their age in violation of Age Discrimination in
Employment Act of 1967 (ADEA). The union requested arbitration under the
CBA, but later withdrew the age-discrimination claims. The employees then
filed suit claiming a violation of the ADEA; the district court denied the
employers' motion to compel arbitration; the 2nd Circuit affirmed. The
US Supreme Court reversed, holding that a provision in a collective
bargaining agreement that clearly and unmistakably requires union members to
arbitrate ADEA claims is enforceable as a matter of federal law. The Court
found that employment-related discrimination claims are "conditions of
employment" under the National Labor Relations Act and thus subject to
mandatory bargaining. The CBA's arbitration provision must be honored unless
the ADEA itself removes this class of grievances from the NLRA's broad
sweep. The Court has already held (Gilmer v. Interstate/Johnson Lane (1991))
that the ADEA does not preclude arbitration of ADEA claims. The Court
rejected the argument that Alexander v. Gardner-Denver (1974) held that a
CBA arbitration clause cannot waive an individual employee's right to
litigate. The
DISSENT relied on Alexander v. Gardner-Denver, saying that that case held
that rights conferred by Title VII cannot be waived as part of the
collective bargaining process. This applies equally to the ADEA, and
includes the right to a judicial forum. CA
- Interest arbitration violated California Constitution's home rule
provisions.
County
of Sonoma v. Superior Court (California Ct App 04/24/2009) The
County of Sonoma sought relief from the trial court's order compelling
interest arbitration with the Sonoma County Law Enforcement Association (SCLEA).
The California Court of Appeal reversed. The issue was whether (after County
of Riverside v. Superior Court, 30 Cal 4th 278 (2003)) the amended version
of Code of Civil Procedure section 1299 et seq continued to intrude upon
Sonoma County's constitutional authority to establish compensation and terms
of employment for county employees. The court found that home rule powers
reserved to local government under the Cal Const, art XI, section 1, subd
(b) were violated by the amended version of section 1299 of the Code of
Civil Procedure by affecting the legislative function to set employee
salaries and by establishing a unanimity requirement for the governing body
to reject the arbitration panel's decision. Additionally, the court found
the amended version of section 1299 violated Cal Const, art XI, section 11,
subd (a) by impermissibly delegating to a private body - the arbitration
panel - the power to interfere with county money (by potentially requiring
the county to pay higher salaries than it chose) and to perform municipal
functions determining compensation for county employees.
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Professor of Law Emeritus.
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