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Arbitration Law Memo March 2010
by Ross Runkel at LawMemo
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Arbitration Law Memo -
March 2010 |
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Arbitration - Individual contracts *** ·
MO
- Mere continued employment did not evince acceptance of arbitration
agreement. ·
OR
- Arbitration provision was not substantively unconscionable. ***
Arbitration - Collective bargaining agreements *** ·
PA
- Act 111 arbitration award violated Municipalities Financial Recovery
Act. ·
NY
- Trial court erred when it granted transit authority's petition to stay
arbitration. ·
10th
- Ceding railroad maintenance obligations was minor dispute under RLA. *** Arbitration -
Individual contracts ***
NY
- Court established case-by-case determination of litigant's financial
ability to pay arbitration fees and costs.
Brady
v. The Williams Capital Group (New York 03/25/2010) Brady brought an Article 78 proceeding to compel the employer to pay the arbitrator's fee with respect to her Title VII wrongful discharge claim based on sex and race discrimination. The trial court dismissed the petition holding the fee-sharing provision of the arbitration agreement, rather than the American Arbitration Association's (AAA) "employer-pays" rule, governed. The New York Appellate Division reversed. The New York Court of Appeals remitted the matter to the trial court for a hearing on Brady's financial ability to share the costs of arbitration. The court was mindful of the strong state policy favoring arbitration agreements and the equally strong policy requiring the invalidation of such agreements when they contain terms that could preclude a litigant from vindicating her statutory rights in the arbitral forum. The court held that in this context, the issue of a litigant's financial ability is to be resolved on a case-by-case basis and that the inquiry should at minimum consider the following questions: (1) whether the litigant can pay the arbitration fees and costs; (2) what is the expected cost differential between arbitration and litigation in court; and (3) whether the cost differential is so substantial as to deter the bringing of claims in the arbitral forum. MO
- Mere continued employment did not evince acceptance of arbitration
agreement.
Kunzie
v. Jack-In-The-Box (Missouri Ct App 03/09/2010) Kunzie sued the employer for violation of the Missouri Human Rights Act (MHRA) alleging wrongful discharge on the basis of age and gender. The trial court granted the employer's motion to compel arbitration. After arbitration favorable to the employer, the trial court dismissed Kunzie's suit. The Missouri Court of Appeals reversed. The dispositive issue was whether the arbitration agreement lacked mutual assent; and, more specifically, whether the trial court was correct in holding that an employee's continued employment after being presented with an arbitration agreement from his employer stating that the alternative dispute resolution was a condition of continued employment decisively evidenced the employee's intention to be bound by the arbitration agreement. The court disagreed, finding that Kunzie's continued employment, by itself, only evinced his intent to maintain the status quo and was not a positive and unambiguous acceptance. The court held that the manifestation of an existing employee's unequivocal intention to be bound by an employer's proposed arbitration agreement as a new condition of employment necessitated more than the employee's mere continued work to satisfy Missouri's meeting of the minds requirement. The court remanded for an evidentiary hearing to determine whether Kunzie accepted the arbitration agreement. OR
- Arbitration provision was not substantively unconscionable.
Livingston
v. Metropolitan Pediatrics (Oregon Ct App 03/03/2010) Livingston sued the employer for wrongful discharge, breach of contract, and other claims. The trial court denied the employer's motion to compel arbitration, concluding the arbitration agreement was void as against public policy. The Oregon Court of Appeals reversed. Livingston's employment agreement required arbitration of "[a]ny controversy, dispute or disagreement arising out of or relating to this Agreement, or the breach thereof[.]" The trial court explained that there were four aspects of the arbitration clause that rendered it unconscionable: (1) a fee-shifting provision imposing attorney fees and costs on Livingston if he did not prevail; (2) imposition of excessive arbitration fees on Livingston; (3) ambiguity about which version of the American Arbitration Association (AAA) rules would apply; and (4) a confidentiality requirement. The court concluded: (1) in the absence of evidence that the fee-shifting provision, in fact, results in the arbitration forum not providing a reasonable alternative forum for Livingston, the court concluded that the fee-shifting provision was not substantively unconscionable; (2) in the absence of evidence that the fees would have a chilling effect on Livingston's ability to pursue his claims, any conclusion that the fee is unconscionable would be speculative; (3) the AAA rules provide that the employment rules apply; and (4) the confidentiality provision is even-handed and equally benefits and burdens both sides to the employment agreement. *** Arbitration -
Collective bargaining agreements ***
HI
- Trial court's order denying confirmation of arbitration award was not
appealable, where trial court remanded case to arbitrator for rehearing.
SHOPO
v. Cnty of Kauai (Hawaii Ct App 03/19/2010) The police officers' union moved to confirm a grievance arbitration award rendered in its favor. The trial court denied the motion, and granted in part and denied in part the employer's motion to vacate the award. Pursuant to the latter determination, the trial court remanded the matter to the arbitrator with instructions to reconsider an appropriate remedy. The union appealed. The court dismissed the appeal for lack of subject matter jurisdiction. HRS Section 658A-28 is part of a Uniform Arbitration Act (UAA) that the Hawai'I Legislature adopted in 2001. HRS Section 658A-28(a)(3) authorizes an appeal from an order that either confirms or denies an arbitration award. Section 658A-28(a)(5) authorizes an appeal from "[a]n order vacating an award without directing a rehearing[.]" The court observed that "[a]ppellate courts in a majority of jurisdictions that have adopted the UAA and have addressed the issue of appellate jurisdiction under the circumstances of this case have held that appellate jurisdiction was lacking." The court adopted the majority approach, and held that the trial court's order denying confirmation of the arbitration award was not an appealable order. The court noted that "the language in HRS Section 658A-28(a)(5) appears to preclude appellate jurisdiction when a circuit court directs a rehearing, because HRS Section 658A-28(a)(5) authorizes an appeal from an order vacating an arbitration award only when such an order does so ‘without directing a rehearing.'" NY
- Discharge of state employees for failure to maintain required
credentials didn't constitute discipline subject to grievance arbitration.
Children
& Family Services v. Office of Alcoholism & Abuse (New York
03/25/2010) State employees were discharged for letting their credentials expire. The credentials were required for their jobs. The employees sought to arbitrate their discharges pursuant to their collective bargaining agreement's grievance procedure, but the court concluded that the employees were not entitled to grievance arbitration. The court reasoned, "[u]nder our decision in Matter of Felix v. New York City Dept. of Citywide Admin. Servs. (3 NY3d 498 [2004]), the dismissals clearly were not disciplinary, and the employees' assertion that they were does not have a relationship with their collective bargaining agreement sufficient to justify arbitration of the issue." PA
- Act 111 arbitration award violated Municipalities Financial Recovery
Act.
Intl
Assoc of Firefighters v. City of Chester (Pennsylvania Cmnwlth Ct
03/22/2010) The municipal firefighters' union appealed the trial court's order setting aside an Act 111 grievance arbitration award rendered in its favor. The court noted, "[t]his appeal ...requires this Court to again examine the effect of the Municipalities Financial Recovery Act (Act 47) on collective bargaining rights under the statute known as the Policemen and Firemen Collective Bargaining Act (Act 111)." The arbitration award at issue granted an annual wage increase to firefighters of more than 3%, in spite of the fact that the city's Act 47 recovery plan capped annual wage increases at 3%. The court determined that the arbitration award violated Act 47, to the extent the annual wage increase exceeded 3%. The court thus modified the award to reduce the increase to 3% (rather than setting aside the award altogether) and affirmed as modified. PA
- Court rejects employer's attempt to introduce "after-acquired
evidence" of irregularity of arbitration proceedings.
City
of Wilkes-Barre v. Wilkes-Barre Fire Fighters Assoc (Pennsylvania Cmnwlth
Ct 03/22/2010) The municipal employer appealed the trial court's order affirming an Act 111 grievance arbitration award rendered in the union's favor. The award was based on the arbitrator's conclusions that 1) the grievance was subject to arbitration; and 2) employer violated a pay "parity" provision in the parties' collective bargaining agreement. The court affirmed. The employer argued that the arbitration proceedings were "irregular" and sought to introduce allegedly after-acquired evidence in support of that contention. The court concluded, "[w]e cannot here conclude that a party is entitled to seek to challenge a witness's credibility with evidence in its possession about which it forgot and remembered after the completion of a hearing, and as in this case, after the issuance of an adjudication. A party's failure to remember evidence that might have aided its case by challenging a witness's credibility simply does not amount to an irregularity of proceedings." NY
- Trial court erred when it granted transit authority's petition to stay
arbitration.
Niagara
Frontier Trans Auth v. NFTA Superior Officers Assoc (New York App Div
03/19/2010) The transit authority officers' union appealed from the trial court's order granting the transit authority's CPLR article 75 petition for a permanent stay of arbitration. The dispute arose from the promotion of a firefighter to acting captain, resulting from an alleged vacancy. The court reversed, stating "[w]e conclude that the dispute is arbitrable inasmuch as the alleged ‘promotion' may be deemed to constitute an ‘assign[ment],' thus obligating petitioner to determine the availability of the existing captains and to offer them overtime before making that assignment. Those issues should be resolved by an arbitrator." CA
- Arbitrator didn't exceed her authority when she ordered reinstatement of
laid-off housing authority employee.
San
Francisco Housing Auth v. SEIU (California Ct App 03/09/2010) The union appealed the trial court's order vacating a grievance arbitration award rendered in its favor. The court reversed. The arbitration award ordered reinstatement of a laid-off housing authority employee, based on the arbitrator's conclusion that the employer violated the "meet and confer" provision in the parties' memorandum of understanding (MOU). The employer argued that the arbitrator exceeded her authority by ordering the employee reinstated into a position to which she was not entitled under the MOU. The court rejected that argument, noting that although the parties' agreement did not mandate placement of the employee into the position at issue, nothing in the agreement prohibited that remedy. The court also rejected the employer's argument that the arbitrator's decision constituted a modification of the parties' agreement, observing that "[t]he arbitrator recognized that the parties [themselves] could modify the contract" to resolve their dispute. NY
- State Division of Human Rights failed to give preclusive effect to
findings made in prior arbitration proceedings.
Dept
of Labor v. Div of Human Rights (New York App Div 03/11/2010) The public employer sought review of a determination by the State Division of Human Rights, which found that the employer discharged its employee in retaliation for complaining about sexual harassment. The court annulled that determination, based on application of res judicata and collateral estoppel arising from prior grievance arbitration proceedings. The court concluded that the employee was "precluded from relitigating either the arbitrator's findings of fact or his conclusions...." 10th
- Ceding railroad maintenance obligations was minor dispute under RLA.
Brotherhood
v. Burlington Northern (10th Cir 03/02/2010) The union sued the employer alleging violation of the Railway Labor Act (RLA) and the collective bargaining agreement (CBA) in assigning maintenance to the New Mexico Department of Transportation, the purchaser of 290 miles of rail line. The trial court dismissed the action for lack of jurisdiction over the claims. The 10th Circuit affirmed. The court found the dispute was minor: (1) the CBA placed no restrictions on the employer's right to sell rail lines, (2) the employer had previously sold properties to third parties and ceded its maintenance obligations, (3) several arbitration decisions involving leased or sold railroad properties supported the employer's decision, and (4) the court's conclusion was in accord with the decisions of other federal courts. The court concluded that the factors all arguably justified the employer's explanation for its action and that binding arbitration of minor disputes was mandatory by the National Railroad Adjustment Board under the RLA.
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