Arbitration/Collective Bargaining/Federal Arbitration Act: Court of Appeal Finds That Individual Arbitration Agreement Not Inconsistent With Collective Bargaining Agreement Is Enforceable

Where Federal Preemption Applies, The Employee’s Contract Cannot Deprive The Employee Of A Benefit – Such As The Right to File a Lawsuit Instead Of Arbitrating – If The Collective Bargaining Agreement Provides The Benefit. 

     Denying employer’s motion to compel arbitration, and both parties’ sanction motions, the trial judge explained:  “It’s clear to me both subjectively and objectively that counsel are just on different planets on this case.” 

     1905.  Library of Congress.

     Defendant/employer appealed the denial of its petition to compel arbitration, and Plaintiff/employee appealed the denial of her sanctions motion.  Willis v. Prime Healthcare Services, Inc., B253712 (2/5 Nov. 14, 2014) (Turner, Kriegler, Mink) (certified for partial publication).

     The gravamen of Plaintiff’s wage and hour claim was that, “she and other potential members did not receive proper pay because an electronic system rounded the number of hours worked to their detriment.”

     Critical to the outcome of the case are the relationships between the employee/employer collective bargaining agreement, the employee’s individual employment agreement with an arbitration clause, and federal preemption, discussed in the published part of the opinion.

     Plaintiff argued that the employer’s collective bargaining agreement was inconsistent with her individual employment agreement that did not require arbitration, rendering the arbitration agreement inapplicable.   Defendant argued that the employee was bound by the arbitration clause in her individual employment agreement.

     First, because Defendant received reimbursement from Medicare payments, and other aspects of interstate commerce were involved, the individual arbitration agreement was subject to the Federal Arbitration Act.

     Second, federal common law – specifically, J.I. Case Co. v. NLRB, 321 U.S. 332 (1944), requires that an individual employee contract cannot waive any benefit to which an employee otherwise would be entitled under a collective bargaining agreement, in an industry affecting commerce as defined in the Labor Management Relations Act of 1947.  Applying that principle here, the individual contract requiring arbitration could not deprive the employee of the right to file a lawsuit, if such right was a benefit available in the collective bargaining agreement.

     Third, however, the J.I. Case decision did not invalidate the arbitration provision in Plaintiff’s individual agreement, which provision covered “any dispute,” and thus covered Plaintiff’s statutory wage and hour claims.  However, the collective bargaining agreement specifically covered “grievances.”  Under the collective bargaining agreement, a grievance was defined, “as a dispute as to the interpretation, meaning or application of a specific provision of this Agreement.”  And there was nothing in the collective bargaining agreement, “about the use of an electronic system to calculate hours and rounding those calculations in a manner detrimental to an employee.”  Hence, there was no inconsistency between Plaintiff’s individual agreement and the collective bargaining.  In other words, the necessary predicate for federal preemption purposes requiring application of the collective bargaining agreement – inconsistent benefits in the individual and collective bargaining agreements – was lacking.  Therefore, the individual agreement with its binding arbitration provision, rather than the collective bargaining agreement, applied.

     And the sanctions?  The trial judge said:  “This is just counsel, very able counsel, in good faith who are looking at opposite ends of the telescope.”  The Court of Appeal found no abuse of discretion in denying the sanctions motion.

1936.  Library of Congress.