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When AAA won't act
December 14, 2006 by Ross Runkel at LawMemo

What if the American Arbitration Association refuses to administer a case even though two parties have agreed to arbitrate under AAA rules?

Actually the answer is pretty simple, as discussed in Deeds v. Regence BlueShield of Idaho (Idaho Supreme Court 07/28/2006).

Brooke Deeds had a health care insurance policy with Regence. After Deeds was injured in a car wreck, Regence refused to pay for treatment for her injuries.

Deeds sued. Regence pointed out that the insurance policy included an agreement to arbitrate disputes, which required "arbitration in accordance with the applicable rules of the American Arbitration Association."

Problem: AAA refused to administer the arbitration.

The Idaho Supreme Court pointed out that all this meant was that AAA rules had to be followed. It did not mean that AAA had to administer or conduct the arbitration. Therefore, the court ordered the parties to arbitrate, and the trial court will appoint the arbitrator.

My view: Correct outcome and reasoning.

There was no language in the agreement that said the arbitration had to be conducted by AAA, only that AAA rules had to be followed.

I learned about this case from Florida Arbitration Law . Com: Idaho SC Enforces Arbitration When AAA Refuses: "in accordance with applicable rules of the AAA" Doesn't Require Using the AAA.

Employee reinstated, and then fired again
December 12, 2006 by Ross Runkel at LawMemo

An arbitrator ordered a company to reinstate a discharged employee with back pay. The company paid the back pay, and simultaneously discharged the employee a second time for conduct independent of the first discharge.

Local 1776 v. Excel (3rd Cir 12/01/2006) held that the company did not violate the arbitrator's award by doing this.

The arbitration had to do with the first discharge on a claim of theft. The second discharge had to do with a claim that the employee assaulted a security guard.

The issue for the 3rd Circuit was whether the employer satisfied the arbitrator's award when it paid the employee back wages and simultaneously discharged the employee a second time for conduct independent of the first discharge.

The court said yes, considering the circumstances of this case: (1) the employer notified the employee that his attack on the security guard was grounds for discharge, (2) the arbitrator only considered the alleged theft by the employee, not the attack on the security guard, (3) the employer effectively reinstated the employee as required by the arbitral award by paying him for the period between the time he was suspended pending investigation of the attempted theft through the effective date of his discharge, (4) the employer had an independent reason (the attack on the security guard) to discharge the employee, and (5) the union had already filed a second grievance pursuant to which a second arbitrator will have the opportunity to rule on the issues of notice, waiver, and the existence of good cause for the second discharge.

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