A non-political statement (to the extent that there still is such a thing) to open this “Highlights.” As I write this on Thursday evening, the vote count is still going on in five states.  Wherever you fall on the political spectrum, the turnout of voters and the dedication of both Republican and Democratic voting officials epitomizes what makes a democracy great. 

Turning to another form of – hopefully – thoughtful resolution of disagreements, today’s cases break little new ground.  However, several of them are unusually rich in citations and provide a good ground for starting research.

Fed. Rule 12(b)(3) and continued employment as acceptance of arbitration

Rakowski v. Best Buy Stores, L.P., 2020 U.S. Dist. LEXIS 205698 (D. Md.) (Nov. 3, 2020) provides a well-researched analysis of both Fed. R. Civ. P. 12(b)(3) (dismissal for lack of venue) and the often-arising issue of whether continued employment constitutes acceptance of an employment policy requiring arbitration of disputes.  As a preliminary matter, Judge Hollander discusses her views on the applicable Federal Rule of Civil Procedure for considering a motion to compel arbitration. Treating an arbitration agreement as if it were a contractual “forum-selection” clause, the court concludes that Rule 12(b)(3), which governs motions to dismiss for improper venue, governs dismissals of litigation in favor of arbitration. Whether one agrees with the court’s use of venue analysis to resolve a contractual obligation to arbitrate (even the court recognizes that such motions to dismiss are “often brought” under Rule 12(b)(6) and sometimes under Rule 12(b)(1)), this is an exhaustive discussion of Rule 12(b)(3) jurisprudence.

The court’s analysis of whether Rakowski’s continued employment constituted assent to Big Buy’s employment policy is not unusual, holding that the dispute must move to an arbitration forum.  Again, though, the opinion is a great source of other authorities.  Of particular interest is Judge Hollander’s distinguishing of cases where a “brief period” of continued employment was held to be insufficient to show consent, see e.g., Dugan v. BestBuy Co., 2017 WL 3442897 (N.J. Super. Ct. App. Div.) (August 11, 2017), from those where the work relationship continued for a longer stretch.

Arbitrator’s application of contract standards

While the arbitration in United Airlines, Inc. v. Air Line Pilots Association, International,  2020 U.S. Dist. LEXIS 205790 (E.D. Va.) (Nov. 3, 2020) was conducted under the Railway Labor Act (yes,  the RLA applies to airlines), its principles are generally applicable. The dispute arose out of discipline imposed by United against one of its union pilots for his alleged retaliation against a cabin crew member, which, in turn, related to her earlier claim of sexual harassment.  The airline maintained that the pilot’s conduct violated its Protection Against Retaliation Policy and, after an internal review process, terminated his employment.  The pilot appealed to the United Airlines Pilots System Board of Adjustment, whose 3-2 award, rescinding the termination in favor of a 60-day suspension followed by reinstatement with back pay and benefits, is the basis of this opinion by Judge Buchanan.

The issue before the court centered on whether the neutral arbitrator, who cast the deciding vote and wrote the award, improperly expanded the scope of his consideration from the pilot’s compliance with the airline’s retaliation policy to a more general view of what constitutes “unlawful retaliation.”  The issue arose because the arbitrator in his award referenced the EEOC’s definition of “unlawful retaliation,” which differs slightly from United’s guidelines.   The court’s opinion analyzes an array of Fourth Circuit precedents which discuss whether an arbitrator has applied the “essence of the agreement” or improperly applied “his own brand of industrial justice.”  Although those cases arise in the context of collective bargaining agreements, the court’s holding and its recognition of the limited scope of review of an arbitrator’s decision have a more general application.

Effective-vindication

Dudley v. American Family Care, Inc., 2020 U.S. Dist. LEXIS 206099 (M.D. Ala.) (Nov. 4, 2020), while short, is worth reading for its treatment of the various ways in which the cost of arbitration might render the choice of that forum unconscionable or otherwise invalid.  Most interesting is the discussion of the “effective-vindication” defense, an allegation that the cost of arbitration essentially forecloses the claimant’s opportunity to pursue his or her charges. After discussing the AAA’s limitation on arbitration fees in employment cases, the nature of the costs which Dudley would incur, and her evidence of “extreme hardship,” Judge Thompson rejects her defense and compels arbitration.

Collateral estoppel of an FLSA claim by earlier arbitration

The fact pattern in Trask v. Town of Alma, 2020 U.S. Dist. LEXIS 204107 (W.D.N.Y.) (Nov. 2, 2020) is a complicated one involving the authority of various individuals and entities to terminate a highway department worker in Alma. But, while relevant to other parts of the opinion, these complexities do not affect the claim preclusion issues.

In a prior administrative proceeding, Trask asserted a claim for unpaid wages allegedly due under his collective bargaining agreement. The Administrative Law Judge dismissed the claim, a decision which the Town claimed precludes this action.  Relying on the FLSA’s grant of a “‘nonwaivable’ right to a minimum wage”, Judge Reiss holds that the statute supersedes any provisions of a collective bargaining agreement and that the arbitrator, while “competent to resolve many preliminary factual questions,” cannot decide the “ultimate legal issue of whether an employee’s right to a minimum wage. . . has been violated.”  Therefore, the arbitration does not preclude an FLSA action.

Quick Hits –

Med/Arb

Applying Texas substantive law, the Fifth Circuit, in a footnote, holds that a mediator may also act as an arbitrator in the same case. Ron v. Ron, 2020 U.S. App. LEXIS 34887 (5^th Cir.) (Nov. 4, 2020).  It is unclear from this opinion how the Plaintiff raised and preserved that issue when she was before the arbitrator.  Those interested in that procedural issue will need to pursue the Magistrate Judge’s opinion; my LEXIS search did not turn it up.

Arbitration bound party as class representative

Macklin v. Biscayne Holding Corp., 2020 U.S. Dist. LEXIS 203890 (D.R.I.) (Nov. 2, 2020), joins other authorities, some discussed in earlier “Highlights,” that hold that a plaintiff who has signed an arbitration agreement and, therefore, is precluded from pursuing litigation, may not act as a class representative where some members of the alleged class may not be so foreclosed or may be in a position to challenge their own arbitration requirement.

Jurisdiction to challenge a third–party subpoena

In an interesting, short opinion, Maine Community Health Options v. Albertsons Companies, Inc., 2020 U.S. LEXIS 205506 (D. Idaho) (Oct. 9, 2020), the court discusses the determination of the jurisdictional amount for federal diversity jurisdiction in an action to enforce a third-party arbitration subpoena. After rejecting a claim that the amount in dispute in the underlying arbitration governs, the court holds that the $75,000 threshold is determined by the amount at issue in the subpoena itself. Since the only thing sought from Albertsons was a set of documents, the court finds that the value of the subpoenaed material did not reach that base line for diversity jurisdiction.  Does this effectively eviscerate the provisions of the FAA authorizing enforcement of a subpoena in U.S. District Court? How often are subpoenaed documents worth more than $75,000?

Arbitration against limited parties

Hou v. Voya Insurance & Annuity Co., 2020 U.S. Dist. LEXIS 203822 (E.D. Pa.) (Nov. 2, 2020) raises the issue of whether a party should be bound to arbitrate with one opponent when she will have to litigate the same claims against other defendants, who are not parties to the arbitration clause. Distinguishing a number of Pennsylvania authorities, the court upholds the arbitration clause and grants the defendant’s motion to compel.

Upcoming programs –

New York Arbitration Week runs virtually from November 16 to 20, 2020.  This program, which is presented jointly by Fordham Law School and all the major ADR providers (AAA, CPR, JAMS, ICC, among others), is an invaluable resource for the latest on arbitration law and practice.  For more information, see nyarbitrationweek.com.

Have a good weekend.  Be safe. See you Monday.

Dave Reif
Reif ADR
Dreif@reifadr.com
Reifadr.com