California Mediation and Arbitration

Waiver: Fourth District Div. 2 Holds Lengthy Delay And Failure To Timely Take Affirmative Steps To Arbitrate Results In Waiver Of Right To Arbitrate

Thirty-Nine Page Slip Opinion Hinges On Issue Of Waiver.

        The Court of Appeal addresses a variety of issues in the context of a complicated procedural history in Desert Regional Medical Center v. Leah Miller and Desert Regional Medical Center v. Lynn Fontana, E076058 and E076069 (4/2  1/6/23) (Codrington, Ramirez, Raphael). 

        The procedural history was complicated by the overlapping pendency of a collective bargaining grievance procedure and the lawsuits brought by individual employees, who were employees at the Desert Regional Medical Center (DRMC). Did the individual actions need to be stayed while the union procedure was exhausted? Did the arbitrability of these cases need to be decided by the court or the arbitrator? Did the Federal Arbitration Act or the California Arbitration Act apply? Did the Labor Commissioner have jurisdiction to hear claims brought by the employees, or did the claims need to be arbitrated? Were the employees estopped from arguing that the employer waived the right to arbitrate? Was prejudice necessary to find a waiver of the right to arbitrate? Interesting questions, but in the end the outcome hinged on whether the employer waived the right to arbitrate.

        In the end, the Court of Appeal affirmed the trial court's order denying a motion to arbitrate, agreeing that the employer waived its right to arbitrate. There was an issue as to how long the employer had delayed bringing a motion to arbitrate. That delay was at least a year, possibly up to four years. The court concluded that even during a one year delay, the employer acted inconsistently with asserting a right to arbitrate by engaging in further litigation procedure.

 

 

 

Arbitration, PAGA, Collective Bargaining: A PAGA Lawsuit Is Barred By A Collective Bargaining Agreement In The Construction Industry

A Statutory Route In California Avoids A Private Attorney General Act Of 2004  (PAGA) Lawsuit In The Construction Industry: Labor Code § 2699.6.

        The issue presented in Jerome Oswald v. Murray Plumbing and Heating Corporation, B312736 (2/2  9/2/22) (Lui, Chavez, Hoffstadt), is whether an arbitration clause in a construction industry collective bargaining agreement bars  a PAGA lawsuit. While the recent SCOTUS opinion in Viking River Cruises, Inc. v. Moriana (see our 6.19/22 post) limits the ability of employees to avoid arbitrating PAGA claims wherever federal preemption under the Federal Arbitration Act is involved, California has created its own statutory exception to bringing a PAGA lawsuit: Labor Code § 2699.6. 

        Section 2699.6 generally provides that the right to bring a civil action under PAGA shall not apply to an employee in the construction industry with respect to work performed under a valid collective bargaining agreement providing for wage and hour issues and conditions of work. The states legislative intention behind this legislation is to commit PAGA claims in the building and construction trades to the grievance and arbitration machinery in the building trades to CBAs that provide expressly for key coverage of issues. This was intended to allay "significant legal abuse" by limiting "class action type lawsuits over minor employment issues."

        In Oswald, the Court of Appeal concluded that the CBA met the requirements of § 2699.6. There, it reversed the trial court's order that had denied a motion to compel arbitration under the CBA.

        COMMENT: Perhaps application of the Supreme Court's Viking Cruises decision would have led to the same result. But the Court of Appeal did not discuss Viking Cruises, because California law provided an answer that would not have been incompatible with Viking Cruises.

Arbitration, Enforceability, Delegation: Ninth Circuit Holds Collective Bargaining Agreement As Drafted Did Not Cover Statutory Claims

Ninth Circuit Agrees With District Court That  Labor Dispute Was Not Arbitrable And That Arbitrability Was Properly Decided By The Court.

        In Tramon Wilson-Davis v. SSP America, et al., B306781 (2/3  4/9/21) (Edmon, Lavin, Egerton), a dishwasher sued his employer, individually and behalf of a putative class, for wage and hour violations. A collective bargaining agreement with an arbitration provision existed between Wilson-Davis's union and his employer, so the employer moved to compel arbitration. The district court held that the dispute was not arbitrable, and the Ninth Circuit affirmed, in a  decision originally filed on 3/11/21 and later certified for publication.

        The motion to compel arbitration failed because: "The collective bargaining agreement ... provides for arbitration of claims arising under the agreement, but it does not waive the right to a judicial forum for claims based on statutes." Also, the parties did not  "clearly and unmistakably" delegate to an arbitrator a determination about whether the  matter was arbitrable.

 

 

 

 

Arbitrability: 9th Circuit Holds Court Decides Arbitrability Of Collective Bargaining Agreement Silent About Arbitrability

Commercial Arbitration And Labor Arbitration Agreements Are To Be Analyzed The Same Way.

American Nurses somewhere in England, November 2018. Library of Congress.

        When the agreement is silent about who decides whether a dispute is arbitrable, does the court or the arbitrator decide? The court decides. However, 9th Circuit case law created an exception in the case of collective bargaining agreements: if the arbitration provision is broad, then the arbitrator gets to decide. United Bhd. Of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace, Inc., 94 F.3d 1308 (9th Cir. 1996). And so in a  case where it was undisputed that the arbitration clause was broad, the district court, analyzing the motion to compel arbitration brought by a union representing nurses with grievances, held, consistent with 9th Circuit law, that the arbitrator would get to decide. Defendant, a medical center, appealed. SEIU Local 121RN v. Los Robles Regional Medical Center, No. 19-55185 (9th Cir.  9/18/20) (Van Dyke, Callahan; Dsst. Lee).

        Though district court did not believe that it could overrule 9th Circuit case law, that was not a problem for  the 9th Circuit, which concluded that the district court, rather than the arbitrator, was responsible for determining whether the grievance filed by the union was arbitrable. The panel majority held that Desert Palace was no longer good law, because Desert Palace, Inc. is “clearly irreconcilable with the reasoning or theory of intervening higher authority” set forth in Granite Rock Co. v. Int’l Bhd. Of Teamsters, 561 U.S. 287 (2010), requiring that labor arbitration and commercial arbitration disputes be analyzed the same way.

        Judge Lee dissented, believing Granite Rock did not impliedly overrule Desert Palace, because the two cases addressed different issues.

Arbitration, Waiver: Employer Waived Right To Compel Arbitration Under A Collective Bargaining Agreement

Trial Court's Ruling That Delay And Prejudice Resulted In Waiver Is Affirmed.

            Nunez v. Nevell Group, Inc., G056585 (4/3  5/2/19) (Fybel, Bedsworth, Goethals), addresses an employer's waiver of right to compel arbitration of violations of a wage order under a Collective Bargaining Agreement. The Court affirms the trial court's order denying the employer's motion based on the employer's waiver of its right to compel arbitration.

            Most strikingly, "Nevell explicitly waived any right to compel arbitration by advising the trial court in writing that it would not file a motion to compel." Also, the employer missed two-court ordered deadlines to file a motion, and engaged in significant discovery and other litigation activities "inconsistent with the right to arbitration." There was also a finding that the employee was prejudiced by the employer's tactics.

            The employer made a legal argument that it would have been futile to seek arbitration before Cortez v. Doty Bros. Equipment Co., 15 Cal.App.5th 1 (2017) was decided. The employer's argument was that the CBA provided for arbitration for violation of wage orders, but the employee's complaint was brought under the Labor Code. The Court of Appeal held that Cortez only clarified and did not change the law: "[T]he Cortez court made clear that the only way to interpret the agreement's language requiring arbitration for wage order claims, when such claims must be brought under the Labor Code, is to conclude that the agreement to arbitrate applies to Labor Code claims."

        NOTE: Cortez is the subject of our September 4, 2017 post.

 

Arbitration, Collective Bargaining: Cal Supremes Hold Labor Management Relations Act Does Not Require Arbitration Between Giants And Baseball Security Guards

Dispute Only Required Reference To Collective Bargaining Agreement (CBA), Not Interpretation Of It.

     I blogged about Melendez v. San Francisco Baseball Associates LLC, on December 18, 2017, when it was still in the Court of Appeal. Baseball security guards had sued the Giants, alleging that the guards were intermittent employees, entitled to be paid after they were discharged after every Giants homestand, after the end of the baseball season, and after other park events. The trial court had held that, despite the CBA between the Giants and the guards, their wage dispute was not preempted by the Labor Management Relations Act of 1947, and therefore, did not need to be arbitrated. The Court of Appeal disagreed, holding that even though the claims involved state labor law, the dispute required interpretation of the CBA, resulting in preemption, and therefore requiring arbitration.

    Now the California Supreme Court has reversed the Court of Appeal. Melendez v. San Francisco Baseball Associates LLC, S245607 (Sup. Ct.  4/25/19). Justice Chin authored the unanimous opinion. The  Supreme Court's analysis depends on the distinction between interpretation of the CBA, and reference to it. Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102 (9th Cir. 2000) is the key case setting forth the analysis upon which Justice Chin relied.

        Merely because the CBA had to be read and referenced did not mean that it had to be interpreted; its terms were not in dispute. Thus, because the claims involved independent state labor law, and not a breach of contract, and because interpretation of the CBA was not required, there was no preemption, and arbitration was not required. So: A win, at this stage, for the baseball security guards, leaving the merits to be resolved when the matter is remanded to the trial court.

Arbitration, Collective Bargaining: Third District Affirms Orders Denying Employer's Motions To Compel Arbitration

And Employees' Claims Were Not Preempted By Labor Management Relations Act, 1947 (LMRA).

    In three consolidated appeals, the Court of Appeal affirms orders denying the employer's motions to compel arbitration. Rymel v. Save Mart Supermarkets, Inc., and related cases, C085863, C085865, C085886 (3rd Dist. 12/31/18) (Duarte, Murray, Hoch).

    The employees sued defendant Save Mart Supermarkets, Inc., alleging state law statutory employment claims for industrial injuries and torts flowing therefrom, including failure to accommodate, retaliation, and wrongful discharge. After successfully moving to sever, the employer moved to compel arbitration under a collective bargaining agreement (CBA). Its motions failed in the superior court, and it appealed.

    The CBA did not bind the employees to arbitrate, because it failed to clearly and unmistakably require the employees to arbitrate the statutory claims in question. The knottier issue was whether the state law claims were preempted -- not by the Federal Arbitration Act, but by the LMRA, section 301. 

    The Court applied a two-step analysis to the preemption issue. First, the causes of action involved rights conferred upon the employees by virtue of state law, not by the CBA. Second, the rights underlying the state law claims were not "substantially dependent on analysis of a CBA." As the Court explains, "Generally, a claim based on a 'nonnegotiable' right will rarely require interpretation of a CBA, which by definition represents the culmination of negotiations between labor and management."

    Affirmed.

    DRAFTING TIP:  Clearly and unmistakably identify in the CBA the statutes and rights that are to be arbitrated. 

    

Arbitration, Collective Bargaining,Gateway Issues: 9th Circuit Rules That Arbitrator's And District Court's Confusion Over Arbitrability And Merits Determination Requires Reversal Of Court And Vacation Of Award

Majority, Concurring, And Dissenting Opinions.

Siegfried & Roy in their private apartment at the Mirage Hotel on the Vegas Strip, with one of their performing white lions. Photographer: Carol M. Highsmith. Library of Congress.

 

    Judge Bucklo, sitting by designation, describes the appeal of a labor arbitration award as "surprisingly nuanced", an "analytical puzzle" and "inscrutable." Judge Owens, concurring, believes, "most importantly, the extremely convoluted procedural posture of this case is so odd that our holding today likely will be limited to these very idiosyncratic facts." And Judge Friedland, dissenting, isn't having it. Let's try to unpack this case. Local Joint Executive Board of Las Vegas, et al. v. Mirage Casino-Hotel, Inc., No. 16-16754 (9th Cir.  12/13/18).

    The Union submitted a grievance with the Mirage Casino-Hotel to arbitration. The Union had agreed by way of a Collective Bargaining Agreement (CBA), Memorandum of Agreement, and side letter, that Mirage could subcontract its operations, and the Union culinary workers could work under the subcontracting arrangements for the subcontractor, with Mirage maintaining "full control of the terms and conditions of employment." After the subcontractor, BB King's, a restaurant concession, went bankrupt, the Union members filed a grievance to obtain vested vacation pay and other accrued benefits from Mirage. Because the scope of the arbitration provision covered Union grievances, the Union submitted the grievance to arbitration.

    Here's where it gets dicey. A merits issue was whether the Union members were employees, and Mirage, arguing that they were not employees of Mirage, objected that the dispute was not arbitrable, because Mirage was not the proper party for arbitrating the grievance. The arbitrator agreed, apparently concluding that the Union's remedy to recover was against BB King's, and determined that the dispute was not arbitrable, a result that was confirmed by the district court.

    Judge Bucklo explained that the arbitrator, and the district court, confused the merits issue with arbitrability. While everyone seemed to agree that the merits issue was within the scope of the arbitration provision, and to be decided by the arbitrator, the threshold issue of "who should decide who should decide" was not "clearly and unmistakably" submitted to the arbitrator, who had decided that the matter was not arbitrable. Therefore, the court, not the arbitrator, should decide whether the matter was arbitrable, and deciding that the merits were arbitrable, the court should vacate the award and send the parties back to arbitration -- which is what the 9th Circuit has now done.

    Judge Owens joined the majority "because I believe it is more consistent with current controlling law." But he thinks "the dissent reaches the more equitable result and, if the slate were blank, I would join it."

    And Judge Friedland dissents, explaining that, under the facts here, "the 'clear and unmistakable' test for determining whether a party resisting arbitration has nevertheless consented to having the arbitrator decide substantive  arbitrability" should not apply "when determining whether a party that initiates arbitration has so consented." Here, the Union submitted the matter to arbitration, and therefore should be stuck with the result.

    COMMENT: Yes, the Union submitted the grievance to arbitration, but obviously the disagreement among the judges is about whether the Union submitted the threshold question of "who should decide who should decide" arbitrability to the arbitrator by submitting the grievance to arbitration and participating in the arbitration.

    If the matter is now returned to the arbitrator, and the arbitrator focuses on whether the CBA and other agreements impose on Mirage an obligation to provide the benefits that BB King's should have provided, then I suppose the arbitrator might reach a result in favor of the Union. But this could instead end up as an exercise, albeit quite an interesting one, in futility, if the arbitrator, upon concluding earlier that Mirage was not the employer, also believed that BB King's was the employer, and that Mirage was not the guarantor of the employer's obligations.

    

    

    

Collective Bargaining, Standard Of Review: 9th Circuit Concludes Arbitrator Acted Within His Authority When Reforming Labor Agreement To Cure Mutual Mistake

And Judge Ikuta Dissents.

    The Ninth Circuit affirmed the district court's order confirming an arbitration award in favor of a union seeking relief concerning a bonus provision in the parties' collective bargaining power. The employer had argued that the arbitration award was invalid because the arbitrator reformed the Basic Labor Agreement (BLA) between the Union and the employer, despite a "no-add" provision in that agreement. The district affirmed the award, and the employer appealed. ASARCO v. United Steel, et al., No. 16-16363 (9th Cir. 12/4/18) (Gettleman, McNamee; Ikuta, dsst).

    The arbitrator found that the BLA was based on a mutual mistake, because the Union was unaware of a link between a change in the pension plan and the opportunity of employees to obtain annual bonuses. The arbitrator reformed the BLA to remedy the mutual mistake. It was undisputed that the parties did not discuss the bonus when negotiating, and neither party indicated that the bonus would be impacted by modifying eligibility for the pension.

    The panel concluded "that the arbitrator was acting within his authority when he crafted a remedy to cure the parties' mutual mistake."

    In a characteristically vigorous dissent, Judge Ikuta wrote, "[t]he 'no-add' language in the collective bargaining agreement . . . is unmistakably clear. . . . . Because the arbitrator ignored the no-add provision, his award fails to draw its essence from the BLA and is invalid." She concluded, "the BLA deprives the arbitrator of the authority to rewrite the agreement, and also deprives the arbitrator of the authority to reconsider and reject this limitation on his authority."

    COMMENT: The majority usefully summarizes the standard of review: the district court's decision confirming an arbitration award is de novo, whereas the review of labor arbitration awards is extremely deferential because the courts do not hear claims of factual or legal error by an arbitrator. However, there are three exceptions to the general rule of deference to an arbitrator's decision: "(1) when the arbitrator's award does not draw its essence from the collective bargaining agreement and the arbitrator is dispensing his brand of industrial justice; (2) when the arbitrator exceeds the boundaries of the issues submitted to him; and (3) when the award is contrary to public policy."

Arbitration/Collective Bargaining/Administrative: Cal Supreme Court Holds That Compulsory Interest Arbitration In Private Sector Is Constitutional

Compulsory Interest Arbitration Withstands Challenges That It Is Unconstitutional And An Improper Delegation Of Legislative Authority.

        In 2002, California enacted  "Mandatory Mediation and Conciliation"  (MMC) provisions to facilitate negotiating and completing collective bargaining agreements between agricultural employees and growers.  As the label MMC suggests, it is an unusual scheme, since "mandatory" and "mediation" are not usually joined.  But this is more than mandatory mediation.  If employer/union negotiations fail to reach a first contract, either side can invoke MMC, and the mediator resolves disputed terms and submits a proposed contract to the Agricultural Labor Relations Board, which can then impose the contract on the parties.   Thus, the statutory scheme is also quasi-legislative.  

        Mandatory Mediation and Conciliation is thus a form of compulsory interest arbitration, which is a very different animal than grievance arbitration.  As the Supreme Court explains:

Unlike “grievance arbitration,” which focuses on “construing the terms of an existing agreement and applying them to a particular set of facts,” interest arbitration “focuses on what the terms of a new agreement should be.”   . . .  The MMC process results in “quasi-legislative action” by which “[t]he terms of the ‘agreement’ determined by the arbitrator [are] imposed upon [the employer] by force of law.”

        In Gerawan v. Agricultural Labor Relations Board (United Farm Workers of America, Real Party In Interest), S227243 (Sup. Ct.  11/27/17) (Liu, author), one of our state's largest agricultural growers took on the legendary union founded by Cesar Chavez, challenging the MMC process as unconstitutional and as an improper delegation of legislative authority, succeeding in the Court of Appeal, but losing in the California Supreme Court.   

        Basically, Gerawan's position was that imposing a contract on the individual employer through the MMC process was coercive and at odds with freedom of choice for the employer as well as the employee.   The Supreme Court held that there was no violation of equal protection because there was a rational basis for the MMC process, and the process did not involve an improper delegation of statutory authority.

        In addition to addressing the constitutional issue, the Supreme Court addressed a statutory issue  Gerawan argued that the union had abandoned its employees after a lengthy absence and therefore forfeited its status as employee representative.  The Court held "that an employer may not defend against a union's MMC request by challenging the union's certification as bargaining representative on the basis of abandonment."

        COMMENT:  In the landmark 1905 case Lochner v. New York, involving the state's regulation of bakery employee hours,  a majority of the SCOTUS held that there was "unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract," provoking Justice Holmes' famous dissent, and memorable line, "The Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics."  Who knows? Federalist Society picks likely to be appointed to the SCOTUS, could breathe new life into the spirit of Lochner.  If the SCOTUS revives the spirit of Lochner, arguments about coercion of employers by unions and legislatures may strike a chord that they do not strike in the California Supreme Court.

        On May 15, 2016, I blogged about another aspect of the Gerawan case, the unconstitutionality of a statutory provision that limited review of the Agricultural Labor Relations Board to the Court of Appeal and the Supreme Court, improperly divesting the superior court of original jurisdiction.