Arbitration, Collective Bargaining: Ninth Circuit Reversed District Court’s Order Denying Arbitration, Because Six-Month Statute of Limitations Had Not Run Under Section 301 Of The Labor Management Relations Act
Ninth Circuit Panel Blames Employer For Not Making Good Faith Effort To Address Merits Of Dispute.
SEIU United Health Care Workers-West v. Los Robles Regional Medical Center, No. 13-55672 (9th Cir. Dec. 3, 2015) (Pregerson, Parker, Nguyen) holds “that it is a breach of the duty of good faith performance under Section 301 [of the Labor Management Relations Act, 29 U.S.C. section 189] for an employer to fail to respond within a reasonable time to a union’s communication which seeks to abide by a grievance process set forth in a collective bargaining agreement.’
In this case, the union followed a three-step grievance process, the last step of which can lead to arbitration. Responding to the first and second steps, the employer took the position that the matter was not arbitrable. However, a demand for arbitration did not have to be made until the third step of the grievance process, and when the union made the arbitration demand, the employer waited nearly five months to reject the demand. When the union petitioned to compel arbitration, the employer took the position that the six-month statute of limitations under section 301 had run earlier, when the employer had staked the position that the matter could not be arbitrated.
That was good enough for the district court judge, Manuel Real, to deny the union’s request for arbitration. However, the Ninth Circuit disagreed, explaining:
“Only an ‘unequivocal, express rejection of the union’s request for arbitration’ will start the six-month limitations period under Section 301. There is no such thing as constructive notice of an employer’s refusal to arbitrate; if an employer offers varying responses to a request to arbitrate, its responses do not constitute an unequivocal, express rejection.”
The Ninth Circuit panel panel reversed the district court’s summary judgment and vacated its order dismissing a petition to compel arbitration under Section 301
Arbitration, Existence Of Agreement, Unconscionability, Automobiles: Automobile Purchaser Reasonably Relied On Spanish Translation, Which Did Not Contain Arbitration Clause, Of English Contract That Did Contain Arbitration Clause
Relying On Common Law Principles Of Contract Formation, The Court Of Appeal Ducks Deciding Whether Failure To Comply With Statutory Provision Requiring Spanish Translation Of Contract Resulted In Unconscionability.
Ordinarily, one who signs a contract without understanding its contents will nevertheless be bound by it, just as one who fails to wear reading glasses when reviewing a contract will nevertheless be treated as one who has read the contract. What happens when the purchaser of an automobile signs a contract in English that contains an arbitration clause, and receives a Spanish translation that does not contain the arbitration clause? In the case of Ramos v. Westlake Services LLC, A141353 (1/2 Nov. 24, 2015) (Miller, Richman, Stewart), the Court of Appeal held that the Spanish speaking purchaser, who negotiated the purchase in Spanish, and who received a Spanish translation of the contract that he initialed, “reasonably relied on a Spanish translation of the English Contract . . . provided him and that did not include the arbitration agreement.” As a result, the Court of Appeal held that mutual assent to the arbitration was lacking, and the arbitration agreement was void – affirming the trial court order denying defendant’s motion to compel arbitration.
While the Court of Appeal affirmed the order of the trial court, it did not rely on the trial court’s reasoning. Unlike the Court of Appeal, the trial court had relied on Civil Code section 1632, requiring that “[a]ny person engaged in a trade or business who negotiates primarily in Spanish” in certain transactions, including auto sales, “shall deliver to the other party to the contract . . . a translation of the contract . . . in the language in which the contract . . . was negotiated, that includes a translation of every term and condition in that contract . . . “ The trial court had held that the failure to properly translate the contract into Spanish was unconscionable. The Court of Appeal held that it did not have to address “arguments regarding the scope of section 1632’s remedies or the trial court’s finding that the arbitration agreement was unenforceable due to unconscionability,” because it reached the same result with traditional contract formation concepts.
While strictly speaking, the Court of Appeal did not rely on section 1632 to affirm the trial court’s order, it did note that “it would be anomalous” to hold that the seller was required to provide Ramos a translation, and that the buyer “was not entitled to rely on the accuracy of that translation.”
Arbitration, Class, Severability, Delegation, Class Action: Court Of Appeal Holds Arbitration Clause Enforceable, Except For Severable Fees And Costs Provision In Consumer Arbitration
Fees And Costs Provision In Consumer Arbitration Was Unconscionable Here.
This case involves a common scenario in which a business sells a good or service that is financed, the business is unable to fully perform, and the lender seeks to enforce an arbitration provision when it gets sued. Here, the Court of Appeal held that the arbitration clause was enforceable, with one exception: the provision that shifted fees and costs to the prevailing party in a consumer arbitration was held to be substantively unconscionable. Why? Because a prevailing plaintiff consumer would have been entitled to fees under the Consumer Protection Act, the “loser pays” provision only benefits a prevailing defendant. Brinkley v. Monterey Financial Services, Inc., D066059 (4/1 Nov. 11, 2015) (Aaron, McIntyre, O’Rourke). However, the Court also determined that because the agreement was not permeated with unconscionability, the one unconscionable provision could be severed, saving the rest of the arbitration provision.
This is also a case in which incorporation by reference of AAA arbitration rules resulted in incorporation by reference of the AAA Supplementary Class Arbitration Rules. And that in turn meant here that the decision to determine whether a class-wide arbitration will be allowed is a decision delegated to the arbitrator under the AAA rules. The same delegation of the decision to decide whether to allow class-wide arbitration, with the same result, has been addressed in a case we blogged about earlier on August 20, 2015, Universal Protection Services, LP v. Superior Court of Yolo County (Michael Parnow, et al., Real Parties in Interest), C078557 (3d Dist. August 18, 2015)(published).
Audio Interview With Jessica Silver-Greenberg, Author Of The NYT Special Report On Arbitration, Is Now Available Online
“Have We Lost A Constitutional Right In The Fine Print?”
On the November 12, 2015 edition of Fresh Air, Dave Davies interviews New York Times reporter Jessica Silver-Greenberg, co-author of the New York Times Special Report on arbitration. I have blogged about the series, as well as the retort by the U.S. Chamber of Commerce, in November 1, 2 and 5, 2015 posts. Now you can learn the gist of the report by listening to the interview with Jessica Silver-Greenberg.
U.S. Chamber Of Commerce Trashes NYT Special Report Dumping On Arbitration
U.S. Chamber Of Commerce Is Not Amused.
On November 1 and 2, I reported on the NYT Special Report about arbitration – articles highly critical of the spread of arbitration. While the report is one-sided in its approach, it does serve to highlight the revolution that is quietly occurring in our legal system, as arbitration clauses become increasingly widespread – and enforceable – in employment law, and consumer law.
Predictably, the U.S. Chamber of Commerce has not taken the attack on arbitration lying down. In a spirited defense of arbitration, the U.S. Chamber describes the NYT investigation as “little more than an opinion piece masquerading as fact. . . . incomplete, misleading, and one-sided . . . underscored by the article’s resort to innuendo about the ethics of a Supreme Court Justice . . . “
COMMENT: U.S. Chamber of Commerce v. NYT is only the latest sign that the role to be played by arbitration in the American legal system is now highly politicized. The fault lines are apparent in the liberal/conservative split in SCOTUS arbitration decisions, and the polarization in the statements of labor and consumer versus business interests.
Arbitration, Employment, FAA, Burden Of Proof: Berman Hearings Are Short-Circuited By Enforceable Arbitration Provision
Keep On Truckin’ . . . In Arbitration.
We have posted before about the “Berman hearing”, named after Congressman Howard Berman, and providing workers with a procedure intended to provide “a speedy, informal, and affordable method of resolving wage claims” with the California Labor Commissioner. Under California law, it cannot be waived. However, if there is an arbitration clause governed by the Federal Arbitration Act, which preempts state law, then employers may use the arbitration clause to preempt the state Berman hearing. That is what ultimately happened in Performance Team Freight Systems, Inc. v. Garcia, B259146 (2/2 Nov. 2, 2015) (Boren, Ashmann-Gerst, Chavez) (published), where a trucking company, prior to commencement of Berman hearings, petitioned to compel arbitration with truck drivers filing wage claims.
The trial court had denied the petition, ruling that the agreements fell under an FAA exemption for transportation workers engaged in interstate commerce. Section 1 of the FAA exempts from FAA coverage “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” – and it has been held that transportation workers are included in this exemption. Without determining whether the truckers, who may have been involved mostly in intrastate short-hauls were truly involved in interstate commerce, the Court of Appeal concluded that they had not met their burden of establishing that the the subject agreements were “contracts of employment.”
And that leads us to the burden of proof. The party opposing arbitration bears the burden of demonstrating the exemption to FAA coverage applies. The agreements under which the truckers worked were labeled “Independent Contractor Agreements”. The Court of Appeal stuck with the label “independent contractor” because “only minimal evidence was presented to the trial court relevant to the issue of whether the subject agreements were contracts of employment.”
The Court also had little trouble finding that the clause was broad enough to cover the dispute. Reversed.
COMMENT: The law respects form less than substance. However, labels, light as they may be, are not weightless. When minimal evidence is presented on whether a worker is a contractor or an employee, the label may tip the balance, as it did here.