Tag Archives: contract

Sup. Ct. allows Class Action Arbitration under FAA

In Oxford Health Plans LLC v. Sutter, No. 12-125 (2013), the Supreme Court ruled that an arbitrator can require a class action arbitration.

The gist of the case is that Sutter, a pediatrician, had a fee-for-services contract, which required arbitration for all contractual disputes.  When Oxford failed to promptly pay him and other physicians, Sutter filed a class action in New Jersey.  After filing, the court compelled arbitration.  The arbitrator concluded that the contract called for class action arbitration.  Sutter appealed to higher courts, but these appeals were denied.

The Supreme Court explained its decision as follows.  First, the parties agreed to go to arbitration in their contract.  Second, an arbitrator looks at the contract, makes a decision based on the contractual language, and this decision is binding.  Thirdly, and most importantly, the Supreme Court explained that judicial review is limited to whether the arbitrator interpreted the contract, not whether the court agreed with the decision.  Consequently, because the arbitrator considered the contract, the arbitrator’s decision stands.  They only way to vacate an arbitral decision is when an arbitrator strayed from his task of interpreting the contract.  In other words, not when he performed his task poorly.

As a note: In prior decisions (Steelworkers Trilogy/Misco) in the labor context under the Labor Management Relations Act (LMRA), the Supreme Court had ruled that a contractual language had to explicitly allow class actions in the arbitration clause.  Here, the arbitration clause did not do so.

This raises the question of how the Federal Arbitration Act (FAA) reconciles with LMRA arbitrations when they are both present.  In this case, only the FAA was involved.

via Workplace Prof Blog: SCOTUS OKs Class Arbitration.

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NLRB Issues Major Decision Imposing Bargaining Obligation Over Discipline Before Union Reaches Contract

Alan Ritchey Inc., 359 N.L.R.B. No. 40, 12/14/12 [released 12/19/12], is a major NLRB decision. The time after a union is certified until it reaches its first contract is often long and difficult.

This decision holds, for the first time, that an employer MUST bargain with the union BEFORE imposes major discipline on unit employees notwithstanding the fact that a CBA has not been reached. As the NLRB stated:

Not every unilateral change that affects terms and conditions of employment triggers the duty to bargain. Rather, the Board asks “whether the changes had a material,substantial, and significant impact on the employees’ terms and conditions of employment.” Toledo Blade Co., 343 NLRB 385, 387 2004 emphasized.

This test is a pragmatic one, designed to avoid imposing a bargaining requirement in situations where bargaining is unlikely to produce a different result and, correspondingly, where unilateral action is unlikely to suggest to employees that the union is ineffectual or to precipitate a labor dispute. We draw on this basic principle, adjusted to fit the present context, today.

Disciplinary actions such as suspension, demotion, and discharge plainly have an inevitable and immediate impact on employees’ tenure, status, or earnings. Requiring bargaining before these sanctions are imposed is appropriate, as we will explain, because of this impact on the employee and because of the harm caused to the union’s effectiveness as the employees’ representative if bargaining is postponed.

Just as plainly, however, other actions that may nevertheless be referred to as discipline and that are rightly viewed as bargainable, such as oral and written warnings, have a lesser impact on employees, viewed as of the time when action is taken and assuming that they do not themselves automatically result in additional discipline based on an employer’s progressive disciplinary system.

Bargaining over these lesser sanctions—which is required insofar as they have a “material, substantial, and significant impact” on terms and conditions of employment—may properly be deferred until after they are imposed.

(emphasis added).

via Adjunct Law Prof Blog: NLRB Issues Major Decision Imposing Bargaining Obligation Over Discipline Before Union Reaches Conract.

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Wisconsin labor fight heats up

Public school teachers filed a class action against a public school district that claims it can cut their pay at will and fine them up to $2,500 if they don’t sign their contracts on time.

The class action, which has a putative class size of 230 teachers, alleges that the school district’s contracts have illegal and unenforceable provisions.  For example, the contract allows

  1. The district to fire or reduced the pay and benefits of tenured teachers for vague and undefined reasons;
  2. The district can fine tenured teachers $1,000 to $2,500 if they don’t sign the contract by the time the school district wants it, or seek release from the contract.

The class action further claims:

  • The 2012-13 contracts illegally allow the district to “make salary adjustments ‘due to disciplinary action and/or changes in full-time equivalency warranted by the district,'” in violation of Wis. Stat. § 118.21;
  • The contracts illegally allow the district to cut salary and benefits “if in the sole discretion of the district, the educator fails to meet the expectations referenced in the contract, acts in a manner that is not in the best interests of the district’s students, fails to abide by the terms of the Employee Handbook, fails to carry out the duties and responsibilities of the job description, or if the district decides to reduce the professional staff for financial or other lawful reasons,” in violation of Wis. Stat. § 118.21, § 118.21, and state contract law; and
  • The contracts illegally set up “a liquidated damages schedule that begins assessing damages on June 1,” with fines beginning at $1,000, escalating to 2,500, for failing to sign contracts by June 15, or seeking release from contract; this “unlawfully assesses damages to teachers seeking release from their contracts prior to the statutory date for acceptance.”

The contracts state “that failure to return a signed contract … would result in non-renewal of the teacher’s contract,” the teachers say: “A stigma is attached to being non-renewed by a school district, as it suggests that a teacher’s employment was not continued for performance reasons or misconduct.”

The class cites violation of Wisconsin Statute 118.21, under which the school district must fix teachers’ wages, violation of Wisconsin Statute 118.22, under which the school district must set the contract acceptance date at June 15, and violation of Wisconsin Statute 118.23, under which it can terminate permanent only employees for good cause.

via Courthouse News Service.

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Contingency fees in Personal Injury

The ABA Journal reported on an interesting case; where the attorney was unable to get all of its full contingency fees.  The reason?  Because the client replaced the attorney with himself prior to the $1 million settlement.

New York’s Appellate Division, First Department, ruled in an unsigned opinion that the settlement wasn’t yet final when lawyer Jeffrey Aronsky handled the case because the settlement offer hadn’t been formally communicated to the defendant, Rivlab Transportation. However, the court held that Aronsky will be allowed to place a lien on Gyabaah’s recovery and receive a pro rata fee based on his contributed work, Reuters reports.

Reuters notes that in a dissent, Justice Richard Andrias considered the settlement binding because a general release was signed and defense counsel confirmed in writing that the $1 million settlement offer was accepted.

via Lawyer Replaced by Client Can’t Collect Full Contingency on $1M Settlement, Court Rules – News – ABA Journal.

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NLRB holds dues check-off survives CBA expiration

Recently, the NLRB released its decision (3-1) in WKYC-TV, in which the NLRB reversed the long-standing rule Bethelem Steel that agreements for dues checkoffs will not continue after the contract expires.

The new rule will not apply to pending cases.   The essence of the majority decision is that because dues checkoffs are mandatory subjects of bargaining, the normal Katz rule for such topics–that they must continue while a new contract is being negotiated–should apply unless there is a reason for an exception; the majority found that there wasn’t.  In making this conclusion, the majority distinguished clauses that involved the waiver of rights, like no-strike clauses.  The majority also criticized Bethelem Steel for treating dues checkoff provisions the same as union security clauses (in part because of its reading of Sections 8(a)(3) and 302(c)).

Member Hayes dissented, arguing that there was no evidence that the old rule wasn’t working. Further, he disagreed with the majority’s statutory interpretation.  He also stressed that limiting dues checkoffs to an active collective-bargaining agreement was more consistent with the concept of voluntary unionism.

via Workplace Prof Blog: Dues Check-Off Now Survives Contract Expiration.

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NLRB recent decisions

This is the list of the most recent and significant decisions decided by the NLRB:

Hispanics United of BuffaloThe Board found that the employer unlawfully fired five employees because of their Facebook posts and comments about a coworker who intended to complain to management about their work performance. In its analysis, the Board majority applied settled Board law to the new world of social media, finding that the Facebook conversation was concerted activity and was protected by the National Labor Relations Act. Member Hayes dissented.

Alan Ritchey, Inc. – In a unanimous decision that resolved the last of the two-member cases returned following the 2010 Supreme Court decision in New Process Steel, the Board found that where there is no collectively-bargained grievance-arbitration system in place, employers generally must give the union notice and an opportunity to bargain before imposing discipline such as a discharge or suspension on employees. Member Hayes was recused.

Latino Express In a decision that will affect most cases in which backpay is awarded, the Board decided to require respondents to compensate employees for any extra taxes they have to pay as a result of receiving the backpay in a lump sum. The Board will also require an employer ordered to pay back wages to file with the Social Security Administration a report allocating the back wages to the years in which they were or would have been earned. The Board requested briefs in this case in July 2012. Member Hayes did not participate in the case.

Chicago Mathematics & Science Academy – Rejecting the position of a teachers’ union, the Board found that it had jurisdiction over an Illinois non-profit corporation that operates a public charter school in Chicago. The non-profit was not the sort of government entity exempt from the National Labor Relations Act, the Board majority concluded, and there was no reason for the Board to decline jurisdiction. Member Hayes dissented in part.

United Nurses & Allied Professionals (Kent Hospital) – The Board, with Member Hayes dissenting, addressed several issues involving the rights of nonmember dues objectors under the Supreme Court’s Beck decision. On the main issue, the majority held that, like all other union expenses, lobbying expenses are chargeable to objectors, to the extent that they are germane to collective bargaining, contract administration, or grievance adjustment. The Board invited further briefing from interested parties on the how it should define and apply the germaneness standard in the context of lobbying activities.

WKYC-TV, Gannet Co. Applying the general rule against unilateral employer changes in terms and conditions of employment, the Board found that an employer’s obligation to collect union dues under a check-off agreement will continue after the contract expires and before a bargaining impasse occurs or a new contract is reached. Member Hayes dissented.

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Public Defenders lose at arbitration

Minnesota Lawyer Blog reports on an arbitration award denying the grievance of public defenders.  In summary, public defenders filed a grievance alleging a collective bargaining agreement (CBA) violation when public defenders were assigned too many cases.

The grievants asked for the arbitrator to order the board of public defense to adopt a maximum caseload standard of 400. Evidence presented by the grievants shows that defenders in the Third District have an average of between 660 and 745 cases in the last five years. They say this excessive caseload violates their union contract because it brings rise to ethical concerns over whether the attorneys can provide adequate representation to their clients and creates a risk that the attorneys will violate the Rules of Professional Conduct.

Arbitrator Befort found that there was no violation since the CBA did not mention a caseload cap.  Further, Arbitrator Befort found that there had been no discipline of attorneys relating to having too many cases.

Befort concluded that the issue was best decided by the state legislature that allocates funding for public defense, and not a union contract dispute.

“[T]his is not a problem that has been caused by the failure of the State Board of Public Defense to fulfill its obligations under the parties’ collective bargaining agreement. Ultimately, the problem at hand is political in nature and requires resolution at a different forum,” he wrote.

A copy of the decision is here.

via PDs lose at arbitration – MinnLawyer Blog.

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