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Arbitration Law Memo - May 2009
by Ross Runkel at LawMemo
| Arbitration Law Memo - May 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 ***NY - Arbitration fee-splitting clause was unenforceable (3-2).Brady
v. Williams Capital (New York App Div 04/30/2009) This appeal raised two questions: first, whether the American Arbitration Association's (AAA) employer pays rule should supersede the fee-splitting provision of the arbitration agreement; second, whether the fee-splitting arbitration provision should be invalidated as violative of public policy. The court found the parties controlled the terms of the arbitration agreement and ruled that the fee-splitting provisions of the arbitration agreement governed over the AAA employer pays rule. Because Brady established that the arbitration fees and costs were so high as to discourage her from vindicating her state and federal statutory rights in the arbitral forum, the court concluded the arbitration clause was unenforceable. The DISSENT argued it was unclear why someone whose income totaled more than $1,500,000 from 1999 through 2004 would be unable to pay $21,450 for her share of the arbitrator's estimated fee. 6th - Arbitration cost-splitting clause enforced where employee can seek waiver.Mazera
v. Varsity Ford (6th Cir 05/19/2009) Mazera sued the employer, asserting state and federal claims for race and disability discrimination. Mazera moved for a declaratory judgment that his employer’s arbitration agreement was unenforceable. The trial court denied Mazera’s motion, and granted the employer’s motion to compel arbitration. However, the trial court also severed a cost-splitting provision that required Mazera to deposit up to $500 of the arbitration costs. The 6th Circuit affirmed as to enforceability, but reversed as to the cost-splitting provision. The Court concluded 1) Mazera was not entitled (pursuant to Section 4 of the Federal Arbitration Act (FAA)) to a jury trial regarding validity of the arbitration agreement; and 2) the presence of a “waiver” option in the agreement, allowing employees to seek waiver of the cost-splitting deposit requirement, merited reversal as to the cost-splitting provision. The court directed that Mazera seek waiver “if he desires to pursue arbitration without having to comply with the cost-splitting provision.” OR – Ruling on motion to compel arbitration deferred until after resolution of class certification issues.Green v. Solomon Smith Barney
(Oregon Ct App 05/20/2009) Green sued the employer in a class action, asserting a claim for violation of ORS 652.140 (which requires employers to timely pay wages owing upon termination of employment). The employer moved to compel arbitration. The trial court deferred ruling on that motion until after completion of limited discovery relating to the issue of class certification. Ultimately, the trial court granted class certification as to some claims and denied the employer’s motion to compel arbitration of those claims. The trial court also denied class certification as to other claims and granted the employer’s motion to compel as to those claims. On appeal, the employer argued that the trial court violated ORS 36.625 when it deferred ruling on the motion to compel arbitration. The court disagreed. ORS 36.625 requires that a trial court “summarily” decide a dispute regarding the arbitrability of claims. The court held that ”’summarily,’ as used in ORS 36.625, means that the court must decide the issue of arbitrability expeditiously and without a jury.” The court noted that this definition is consistent with the comment to Section 7 of the Uniform Arbitration Act. Applying that definition, the court concluded that the trial court acted expeditiously. The court reasoned that it was undisputed the arbitration agreement did not provide for arbitration of class action claims, and arbitration was thus only proper as to those claims that were denied certification. *** Arbitration - Collective Bargaining Agreements ***NY - Arbitration for uncertificated teacher violated public policy (3-2).New York State
Office of Children v. Lanterman (New York App Div 05/14/2009) Lanterman sought arbitration under the collective bargaining agreement (CBA) for her discharge for not having a teaching certificate. The trial court denied the employer's motion to stay arbitration. The New York Appellate Division reversed. The court held that requiring a public entity to arbitrate regarding the discharge of a teacher who failed to obtain or maintain statutorily-mandated teacher certification violated public policy. The DISSENT argued that the public policy exception should not apply where an arbitrator could, after considering all relevant factors, potentially fashion a remedy other than discharge, for example, a suspension without pay or demotion to another open position for which a teaching certificate was not required or some other possible remedy, which would not violate either the CBA or the public policy assuring the qualifications of teachers. MO - Purported arbitration award not confirmed, since award was rendered as intermediate step in grievance process.Kritzer v. University of Missouri
(Missouri Ct App 05/12/2009) Kritzer appealed the trial court’s judgment denying confirmation of a purported arbitration award and finding she was not entitled to challenge her discharge under Chapter 536 of the Missouri Administrative Procedure Act. The court affirmed, concluding that 1) the purported arbitration award was rendered as an intermediate step in the employer’s grievance process, and was not binding; and 2) Kritzer was an “at-will” employee not entitled to review under Chapter 536. 2nd - Employer required to arbitrate changes in employees' benefits plans.United Steel and Service Workers v.
E.I. DuPont (2nd Cir 05/01/2009)
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Employment Law Editor: Ross Runkel,
Professor of Law Emeritus.
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