Arbitration Law Memo December 2009
by Ross Runkel at LawMemo
Arbitration Law Memo -
December 2009 Click
for Latest Employment Law Cases
- Supreme Court argument on whether imposing class arbitration on parties
whose arbitration clauses are silent on that issue is consistent with the
Federal Arbitration Act.
v. AnimalFeeds (US Supreme Ct oral argument 12/09/2009)
The parties in this case are parties to international maritime contracts that contain arbitration clauses. The contracts are silent as to whether arbitration is permissible on behalf of a class of contracting parties. A panel of arbitrators was tasked with deciding whether that silence permitted or precluded class arbitration, and issued an award deciding that the contracts permit class arbitration. A United States District Court vacated the award on the ground that it was made in manifest disregard of the law. The 2nd Circuit reversed, finding that the arbitration panel did not manifestly disregard a rule of federal maritime law, and did not manifestly disregard New York State law.
The US Supreme Court granted certiorari to review the 2nd Circuit judgment. The formal issue is: "Whether imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq."
- Arbitration not compelled; employment agreement was terminated before
employee was discharged, and agreement to arbitrate did not continue and
cannot be implied.
v. Lonnquist (Washington Ct App 12/14/2009)
After Weiss was discharged, she sued her former employer under a number of theories. The employer moved to compel arbitration; the trial court denied the motion; the Washington Court of Appeals affirmed.
Weiss had been employed under a written contract that contained an arbitration clause. The employer terminated the agreement but continued to employ Weiss. Later the employer discharged Weiss.
(1) The court held that Weiss was not obligated to arbitrate under the terms of the written agreement because it had been terminated and her claim arose more than a year later. (2) The court also held that there was no implied agreement to arbitrate. Although it can sometimes be implied that an employee continues to work under the same terms that were contained in an expired agreement, that implication was not proper here. The terms of employment after the agreement expired were significantly different than they had been, so none of the previous terms (including the agreement to arbitrate) continued.
- Pre-arbitration conference is not a jurisdictional prerequisite to
National Railway Adjustment Board arbitration.
Pacific Railroad v. Brhd of Locomotive Engineers (US Supreme Ct
Five railway employees' grievances went to arbitration before a National Railway Adjustment Board panel. The panel dismissed the cases for lack of jurisdiction, because there was no proof that the parties had engaged in the statutorily-required pre-arbitration conference. The district court agreed. The 7th Circuit reversed, on the ground that the arbitration panel denied the Union constitutional due process.
The US Supreme Court unanimously affirmed, for different reasons. The Court held that the 7th Circuit erred by resolving the case on constitutional rather than statutory grounds. The Court found that the statutory requirement of a pre-arbitration conference was not jurisdictional. Therefore, the arbitration panel was wrong when it refused to adjudicate the grievances on the false premise that it lacked jurisdiction. The requirement to have a conference is a "claims-processing rule" and does not go to the panel's jurisdiction. As the Court put it, "By refusing to adjudicate cases on the false premise that it lacked power to hear them, the ... panel failed 'to conform, or confine itself' to the jurisdiction Congress gave it."
- Court upholds arbitrator's "probably erroneous" decision that
jurisdictional dispute was arbitrable (2-1).
Postal Union v. American Postal Union (DC Cir 12/18/2009)
Although the Postal Service had assigned certain work to the National Postal Union, the American Postal Union claimed the work and sought arbitration. An agreement between the two unions and the Postal Service provided that such disputes were arbitrable, except that work assignments "as they currently exist" could not be challenged. Because the assignment was pre-existing, the National Union and the Postal Service opposed arbitration. The three parties agreed to present the arbitrability issue to the arbitrator, who decided that the dispute was arbitrable and awarded the work to the American Postal Union. The district court upheld the arbitrator's decision even though it was "probably erroneous."
The DC Circuit affirmed by a 2 to 1 vote. The court said that the highly deferential approach to an arbitrator's decision on the merits of a dispute applies equally to a decision on arbitrability when that issue was submitted to arbitration. The test is whether the arbitrator was "even arguably construing or applying the contract." Although the arbitrator "should have ruled that the grievances ... were not arbitrable," the arbitrator used a continuing violation theory, and this was "arguably construing or applying the contract."
The DISSENT argued that "the arbitrator based his decision entirely on his external legal theories relating to 'continuing violation' without regard to the express terms of the parties' agreement."
- "Manifest disregard of the law" didn't constitute a basis for
vacating grievance arbitration award.
of Cleveland v. IBEW (Ohio Ct App 11/25/2009)
The municipal employer appealed from the trial court's refusal to vacate a grievance arbitration award reinstating an employee. The employee had been discharged for allegedly making threatening statements about two co-workers to a third co-worker with whom she had a personal relationship, but the trial court determined that the third co-worker lacked credibility. The court affirmed. The court refused to apply the "manifest disregard of the law" standard, noting that Ohio courts have previously rejected "manifest disregard of the law" as a basis for disturbing an arbitration award. The court rejected the employer's challenge to the trial court's credibility determination, noting "[t]his is a factual conclusion that is beyond the scope of what the city can challenge in seeking to vacate an arbitration award."
- Dispute as to employer withdrawal from multiemployer pension plan is
subject to mandatory arbitration.
Cleaners v. Textile Union (8th Cir 12/16/2009)
The employer sought a declaratory judgment that it was not obligated to make payments to a union-based pension fund. The trial court re-characterized the claim as one for a declaration that the employer was not subject to pension payment liability for withdrawal from the fund, and held that such a dispute is subject to mandatory arbitration under the Multiemployer Pension Plan Amendments Act (MPPAA), 29 USC Section 1401.
Although the employer argued that its claims were based on the Labor Management Relations Act rather than the MPPAA, the 8th Circuit affirmed, finding that this was "a quarrel over withdrawal liability" which makes the dispute subject to mandatory arbitration.
Dist Transp Auth v. Planz (New York App Div 12/24/2009)
The public employees' union appealed the trial court's order staying grievance arbitration of Planz's discharge. The court reversed, concluding that the trial court erred in staying arbitration. The court noted that arbitration of the dispute was permissible under the Taylor Law, that the arbitration clause in the parties' collective bargaining agreement was broad, and that the issue in dispute was not specifically and unambiguously excluded from the scope of the arbitration clause.
of East Providence v. IAFF (Rhode Island 11/20/2009)
The employer appealed the decision of the arbitrator restoring the employee's sick leave and granting injured on-duty (IOD) benefits pursuant to the "Cancer Benefits for Fire Fighters" statute (GL 1956 chapter 19.1 of title 45). The trial court confirmed the award. The Rhode Island Supreme Court affirmed.
The only issue on appeal was whether the employee's leave for treatment of prostate cancer should have been deducted from his sick leave reserve or whether that time should have been restored because his leave fell within the IOD statute. The court stated it was evident that the General Assembly intended to ensure that firefighters diagnosed with cancer receive injured on-duty benefits in accordance with the IOD statute. The court found that the statute's use of the phrase "any fire fighter" was all inclusive. The court concluded that the arbitrator did not exceed his authority in finding that the employer was obligated to provide injured on-duty benefits to firefighters who were diagnosed with cancer.
of Cleveland v. Laborers Intnl Union (Ohio Ct App 12/03/2009)
The arbitrator awarded the union back
pay and overtime pay for violation of the collective bargaining agreement
(CBA) by the employer's failure to meet with the union before hiring a
private contractor. The trial court denied the employer's motion to vacate
the arbitration award. The Ohio Court of Appeal affirmed. The court found
the trial court did not have jurisdiction because the employer did not
serve the motion to vacate within three months as required by R.C.
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