Tag Archives: labor management relations act

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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Filed under Appellate, courts, employment, labor, legal decision, Supreme Court, union, waiver

Successor Liability does not cover federal claims

Teed v. Thomas & Betts Power Solutions, LLC (7th Cir. 2013) held that  a buyer of a company’s assets can’t rely on state law to keep  a seller’s violations of the Fair Labor Standards Act (FLSA) from transferring to the buyer of the Seller company’s assets.  This standard has been previously applied to the LMRA, NLRA, Title VII, ADEA, and FMLA.

The Seventh Circuit explained that federal labor law claims are governed by federal common law, not state law.  Further, the court explained that employees do not have the power to stop an owner from selling the company.  Therefore, the buyer (successor) is stuck with the seller’s (prior owner) liability regardless of what the contract states.

To determine whether successor liability will apply, the Seventh Circuit considered the following multi-part balancing test:

  1. Whether the successor had notice of the pending law suit;
  2. Whether the predecessor would have been able to provide the relief sought in the lawsuit before the sale;
  3. Whether the predecessor could have provided relief after the sale;
  4. Whether the successor can provide the relief sought in the suit (if not successor liability is a phantom); and
  5. Whether there is continuity between the operations and work force of the predecessor and the successor – which favors successor liability because nothing really has changed.

via Buyer Beware of Successor Liability For FLSA Claims | Sands Anderson PC – JDSupra.

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Filed under civil rights, courts, District Court, employment, labor, legal decision, union, wage, waiver