LAST CLASS

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LAST CLASS

• MAY 3, 2006

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CIRCUIT CITY v. ADAMS
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THE 9TH CIRCUIT DECISION

• ON REMAND FROM A SHARPLY DIVIDED SUPREME COURT
• EARLIER DECISION OF THE 9TH CIRCUIT WAS THAT THE
  FAA DID NOT APPLY TO THIS SITUATION, THE SUPREME
  COURT DISAGREED

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FACTS AND SETTING

• ADAMS SIGNED AN AGREEMENT THAT ALL CLAIMS WOULD
  BE ARBITRATED
• SEVERE LIMITATIONS ON DAMAGES WERE IMPOSED
• THE COST WERE SHARED UNLESS THE EMPLOYEE WINS
• UNDERLYING CLAIM WAS SEXUAL HARASSMENT

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THE EMPLOYER CLAUSE AND CALIFORNIA LAW

• THIS IS A CONTRACT OF ADHESION
• STANDARD FORM
• DRAFTED BY A PARTY WITH SUPERIOR BARGAINING POWER
• PRESENTED ON A TAKE IT OR LEAVE IT BASIS

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SUBSTANTIVELY UNCONSCIONABLE

• SINCE IT WAS ONE SIDED-IT DEALT WITH ONLY THE
  EMPLOYEES CLAIMS
• SINCE IT EXCLUDED DAMAGES THAT WOULD OTHERWISE BE
  AVAILABLE

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BUT WHAT ABOUT GILMER?

• GILMER SAYS IN ARBITRATION YOU MUST BE ABLE TO
  PURSUE STATUTORY CLAIMS
• THE COLE REQUIREMENTS WERE NOT MET REGARDING
• UNREASONABLE COSTS
• DOES NOT PROVIDE THE TYPES OF RELIEF AVAILABLE IN
  COURT

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EEOC V. WAFFLE HOUSE

• 534 US 279 (2002)
• JUSTICE STEVENS

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FACTS AND SETTING

• BAKER WORKED THE GRILL
• HE HAD A SEIZURE
• HE WAS FIRED
• HE FILED WITH THE EEOC WHO PURSUED AND
  ENFORCEMENT ACTION
• COMPANY FILED TO COMPEL ARBITRATION

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THE CONTRACT TO ARBITRATE

• ALL EMPLOYEES, AS A CONDITION OF EMPLOYMENT WERE
  REQUIRED TO SIGN

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THE ROLE OF THE EEOC

• IT IS THE ENFORCEMENT AGENCY OF THE FEDERAL
  GOVERNMENT
• IT CONTROLS THE PROCESS
• EMPLOYEE MAY INTERVENE ONLY
• IT CAN SEEK A WIDE VARIETY OF DAMAGES
• THE EEOC WAS NOT A PARTY TO THE AGREEMENT

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HOLDING

• THE COURT ENDORSES THE FAA AND ARBITRATION IN
  GENERAL
• BUT THE COURT NOTES THAT THE FAA ENFORCES
  CONTRACTS AND THE EEOC WAS NOT A PARTY TO THE
  CONTRACT

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COLE V. BURNS INTERNATIONAL SECURITY

• FAA DOES APPLY TO EMPLOYMENT CONTRACTS EXCEPT
  EMPLOYEES INVOLVED IN THE TRANSPORTATION OF GOODS
  IN COMMERCE
• EMPLOYER MUST PAY FOR THE ARBITRATORS FEES

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HOOTERS OF AMERICA V. PHILLIPS

• THE AGREEMENT TO ARBITRATE IS INVALID IN LIGHT OF
  PROCEDURAL PROBLEMS
• THE PROCESS SEEMS DESIGNED TO HELP THE COMPANY
  PREPARE A DEFENSE
• ENSURE A BIASED DECISION MAKER (THEY CONTROL THE
  LIST)
• THE COMPANY CONTROLS WHICH ISSUES GO FORWARD
• THE COMPANY ONLY CAN TRANSCRIBE
• THE COMPANY ONLY CAN VACATE
• THE COMPANY CAN CHANGE THE RULES AT ANY TIME

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ARBITRABILITY AND JUDICIAL REVIEW

• The Labor Relations Model

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STEELWORKERS v. WARRIOR GULF CO

• 1960
• JUSTICE DOUGLAS

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The Facts of Gulf and Warrior

• Company transports steel and steel products by
  barge
• maintains a terminal at Chickasaw, Alabama
• it performs maintenance and repair work on its
  barges
• Company laid off employees, reducing the
  bargaining unit from 42 to 23 men

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More Facts

• company contracted out maintenance work to other
  companies.
• The other companies used respondent's supervisors
  and hired some of the laid-off employees of
  respondent (at reduced wages).
• some were assigned to work on the company's
  barges.

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What does the CBA Require?

• No strike/no lockout
• matters which are strictly a function of
  management shall not be subject to arbitration
  under this section
• Differences between the Company and the Union or
  its members as to the meaning and application of
  the provisions of this Agreement go to an Umpire
  whose decision is final

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District Courts Decision

• It granted respondent's motion to dismiss the
  complaint.
• It held that the agreement did not "confide in an
  arbitrator the right to review the defendant's
  business judgment in contracting out work."
• It held that "the contracting out of repair and
  maintenance work, as well as construction work,
  is strictly a function of management not limited
  in any respect by the labor agreement involved
  here."

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Court of Appeals

• affirmed lower court by a divided vote
• the majority holding that the collective
  agreement had withdrawn from the grievance
  procedure "matters which are strictly a function
  of management
• contracting out fell in that exception

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Why are the differences between labor and
commercial arbitrations important?

• In the commercial case, arbitration is the
  substitute for litigation
• In a labor case, arbitration is the substitute
  for industrial strife
• Since the functions are different the hostility
  evidenced by courts toward arbitration of
  commercial agreements has no place in labor cases
• arbitration of labor disputes under collective
  bargaining agreements is part and parcel of the
  collective bargaining process itself.

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How does Douglas See the CBA?

• states the rights and duties of the parties.
• It is more than a contract it is a generalized
  code to govern a myriad of cases which the
  draftsmen cannot wholly anticipate.
• It is a new common law - the common law of a
  particular industry or of a particular plant. A
  system of industrial self-government

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Other Differences that Make a CBA different from
Other Contracts

• Other contracts are voluntarily entered into, not
  necessarily CBAs which are a function of
  statutory a obligation.
• The is a compulsion to reach agreement (bargain
  in good faith)
• The grievance machinery under a CBA is at the
  very heart of the system of industrial
  self-government

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What the Arbitrator does is Different than the
ablest judge

• Not confined to the express provisions of the
  contract
• Applies the industrial common law
• Will consider the effects on productivity
• Morale at the shop
• His goal and that of the parties is uninterrupted
  production under the agreement

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STEELWORKERS v. AMERICAN MFG. CO.

• 1960
• JUSTICE DOUGLAS

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AMERICAN MGF. THE FACTS

• Sparks left work due to an injury
• Brought an action for compensation benefits.
• The case was settled, Sparks' physician
  expressing the opinion that the injury had made
  him 25 "permanently partially disabled."
• Two weeks later the union filed a grievance which
  charged that Sparks was entitled to return to his
  job by virtue of the seniority provision of the
  collective bargaining agreement.
• Company refused to arbitrate and this action was
  brought.

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Companys Contentions

• That grievant is estopped from making his claim
  because he had a few days previously settled a
  workmen's compensation claim on the basis that he
  was permanently partially disabled
• That Sparks is not physically able to do the work
• That this type of dispute is not arbitrable under
  the collective bargaining agreement in question.

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What are the Relevant Portions of the CBA?

• No strike," unless the employer refused to abide
  by a decision of the arbitrator.
• A detailed grievance procedure with a provision
  for arbitration of all disputes between the
  parties "as to the meaning, interpretation and
  application of the provisions of this agreement
• Discipline for cause
• Seniority applies "where ability and efficiency
  are equal."

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What did the Court of Appeals Do?

• Affirmed
• Held that the grievance is "a frivolous, patently
  baseless one, not subject to arbitration under
  the collective bargaining agreement."

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Arbitrations and the Court-What is the rule
regarding review of the merits of a case?

• If the CBA requires the parties to submit all
  grievances to arbitration, the Court shouldnt be
  concerned with which disputes are meritorious
• Arbitration is a stabilizing influence only as
  it serves as a vehicle for handling any and all
  disputes that arise under the agreement.

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What About Really Bad Grievances?

• The processing of even frivolous claims may have
  therapeutic values of which those who are not a
  part of the plant environment may be quite
  unaware.

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Steelworkers v. Enterprise Wheel

• 1960
• Opinion by William O. Douglas
• Reversing the 4th Circuit

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The facts of Enterprise Wheel

• A group of employees left their jobs in protest
  against the discharge of one employee
• A union official advised them at once to return
  to work.
• An official of respondent at their request gave
  them permission and then rescinded it.
• The next day they were told they did not have a
  job any more "until this thing was settled one
  way or the other."

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Grievance Processing Information

• Grievance is filed
• Company refused to arbitrate
• Suit brought to compel arbitration
• District court compels arbitration

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What was the Companys Contention?

• Before the arbitration award the collective
  bargaining agreement had expired. So the
  arbitration was not enforceable
• That was so even though the discharge occurred
  when the CBA was in effect

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What was the arbitrators authority under the CBA

• As to interpretation he/she was to resolve
  differences as to the meaning and application
  of the CBA
• As to the finality of the decision, the
  arbitrators decision shall be final and binding
  on the parties
• Remedial responsibility of the arbitrator "Should
  it be determined by the Company or by an
  arbitrator in accordance with the grievance
  procedure that the employee has been suspended
  unjustly or discharged in violation of the
  provisions of this Agreement, the Company shall
  reinstate the employee and pay full compensation
  at the employee's regular rate of pay for the
  time lost."

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What did the Arbitrator Rule?

• that the discharge of the men was not justified,
• though their conduct was improper.
• the facts warranted at most a suspension of the
  men for 10 days each
• The arbitrator rejected the contention that
  expiration of the agreement barred reinstatement
  of the employees.
• He held that the provision of the agreement above
  quoted imposed an unconditional obligation on the
  employer.
• He awarded reinstatement with back pay, minus pay
  for a 10-day suspension and such sums as these
  employees received from other employment.

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What was the Ruling of The District Court?

• Union wins, enforces the order

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What is the Ruling of the Court of Appeals?

• the District Court had jurisdiction to enforce an
  arbitration award under a collective bargaining
  agreement,
• that the failure of the award to specify the
  amounts to be deducted from the back pay rendered
  the award unenforceable.
• that defect could be remedied by requiring the
  parties to complete the arbitration.
• that an award for back pay subsequent to the date
  of termination of the collective bargaining
  agreement could not be enforced.
• that the requirement for reinstatement of the
  discharged employees was likewise unenforceable
  because the CBA had expired.

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Should Courts Review the Merits of an Arbitration
Award?

• No, citing United Steelworkers of America v.
  Warrior Gulf Navigation Co.
• arbitrators are indispensable agencies in a
  continuous collective bargaining process.
• they settle disputes that require their knowledge
  of the custom and practices of a particular
  factory or of a particular industry

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How does Douglas Limit the Authority of the
Arbitrator?

• an arbitrator is confined to interpretation and
  application of the collective bargaining
  agreement
• he may not dispense his own brand of industrial
  justice.
• he may look for guidance from other sources,
• his award is legitimate only so long as it draws
  its essence from the collective bargaining
  agreement.

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Was the Arbitrators Opinion Without Defect?

• it was ambiguous
• mere ambiguity in the opinion accompanying an
  award is not a reason for refusing to enforce the
  award
• to require opinions free of ambiguity may lead
  arbitrators to play it safe by writing no
  supporting opinions.

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What Would Acceptance of the Companys View Cause?

• would require courts to review the merits of
  every construction of the contract.
• this review by a court of the merits would make
  meaningless the provisions that the arbitrator's
  decision is final
• This underlines the fundamental error which we
  have alluded to in United Steelworkers of America
  v. American Manufacturing Co.

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FINAL PAPER BACKGROUND
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RULES FOR PAPER

• Due on may 17th
• Hard copy to judy
• E-copy to me at miketlaw_at_miketlaw.Com
• Maximum of 15 pages, double space, 12 point
  font-arial or times roman
• Use student numbers, not names, lets keep this
  anonymous
• Use the format of any of the arbitrations
  provided to you
• Do not restate the facts of the case at the
  opening of the decision, I want the opinion
  remedy and award sections only. You will
  need to work facts into your opinion of course,
  just dont separately state them.

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Arbitrators Just Cause Standard

• Did the grievant have notice
• Was there due process and fairness
• Has the company proved by clear and convincing
  evidence that grievant committed the act
• Was the penalty reasonable

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Working with Facts

• A bit of help
• Trying thinking of facts in the following way

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The Act

• Was the Act
• Intentional
• Grossly negligent
• Simply negligent
• No act at all

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The Consequence of the Act

• From the Reasonable Prospective of the Employer
• Where the consequences
• Significant
• insignificant

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The Modifiers

• Employee Record Modifiers
• Employer Activity Modifiers

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Employee Activity Modifiers

• Length of Service
• The More Good Service the Better for the Employee

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Employee Activity Modifiers

• Quality of Service
• Look to employee evaluations
• Look to disciplinary history

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Employee Activity Modifiers

• Disciplinary History
• The older the discipline the less relevant
• The more significant the discipline the more
  relevant
• Discipline that is similar to the current alleged
  act hold more weight

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The Employer Activity Modifiers

• Was a warning given to employees
• Was it necessary under the circumstances
• What are the employer rules , if any
• Was the rule communicated to the Employee

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The Employer Activity Modifiers

• Was the rule fair and work related

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The Employer Activity Modifiers

• Was the investigation fair
• Were necessary witnesses interviewed
• Were Weingarten rights observed
• Was the investigation shared with the Union

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The Employer Activity Modifiers

• Has there been a history of discipline for
  similar infractions elsewhere in the organization