On this Martin Luther King Day, with the turmoil in the U.S.’s political and social fabric, it is worth remembering Dr. King’s words – “The arc of the moral universe is long, but it bends toward justice.”  May it be so.

And now to the cases.

Review of arbitration under a CBA

The court’s role in reviewing the result of a grievance arbitration has been characterized as among the narrowest of judicial discretion. Warrior Met Coal Mining, LLC v. United Mine Workers, 2021 U.S. Dist. LEXIS 8410 (N.D. Ala. Jan. 15, 2021), Coogler, J., is the unusual case in which the court vacates such an award.

Bradley Nix was an operator at Plaintiff’s mine in Brookwood, Alabama, where he was represented by defendant. Article XV of the Collective Bargaining Agreement established a four-step progressive discipline for attendance violations.  Strike 1 resulted in a warning; strike 2 in a written warning; Strike 3, suspension for a minimum of two days; Strike 4, “discharge.”  The CBA further provided that, in an arbitration arising from violation of the attendance policy,  “the only issue. . . shall be whether the absence resulting in a strike actually occurred.”  Elsewhere, the CBA provided that “No employee covered by this Agreement may be disciplined or discharged except for just cause,”  Article XVII, Section a.  Between January 2017 and October 2019, Nix received thirteen strikes. (The strikes reset on each anniversary of employment). On October 9, 2019, Nix was back up to three strikes.  He arrived two minutes late, elevating him to Strike 4, and Warrior Met discharged him.  He filed a grievance under the CBA.  The arbitrator, applying Article XVII, held that the offense did not constitute “just cause” for discharge and overruled the company’s action.  Judge Coogler grants summary judgment for the Plaintiff and vacates that award, finding that the arbitrator exceeded his authority.  The court holds that the arbitrator erred in reading Article XVII’s “just cause” requirement as a modification of Article XV, rather than stopping his consideration at the progressive discipline’s mandate that “the only issue” for consideration is whether the absence “actually occurred.”  Thus, Judge Coogler opines, the award “did not derive from the essence of the CBA.”  He likens the failure to differentiate between strict mandates and just cause to the Eleventh Circuit’s decision in Warrior & Gulf Navigation Co. v. United Steelworkers, 996 F. 2d 279 (11^th Cir. 1993), which held that a CBA’s provision for “immediate discharge” after a second failed drug test superseded a “just cause” requirement for general discharges. In evaluating the Warrior Met opinion and whether the court strayed from the deference due a grievance decision, it is worth reading the award itself, which is attached to the complaint and available on PACER.

Effect of a tribunal’s termination for non-payment

Greco v. Uber Technologies, Inc. 2021 U.S. Dist. LEXIS 7770 (N.D. Cal. Jan. 14, 2021) addresses the effect of a tribunal’s declination of an arbitration.  Greco brought an action for violation of the Americans with Disabilities Act, alleging that Uber drivers refused to give her rides due to the presence of her guide dog.  She initially filed for arbitration with the AAA. However, the tribunal rejected the claim because Uber “failed to comply with the AAA’s policies regarding consumer claims.”  It appears from the opinion that Uber had failed to pay fees in other matters.  Under the AAA rules, if the AAA declines a matter “either party may choose to submit [the] dispute to the appropriate court for resolution.”  Uber tried to regain compliance, but the tribunal stood firm and refused to reopen the matter, absent agreement of the parties or court order.  In a previous opinion the court, Rogers, J., had refused to compel arbitration.  Here, Uber seeks a stay of the litigation pending an appeal of that order.  The court denies the stay, reviewing the standard three parts of such a consideration – the likelihood of success on the merits, the presence of irreparable harm, and injury to the plaintiff and the public interest.  The significant part of the opinion is related to the likelihood of success.  The court applies the same broad discretion allowed to the decision of an arbitrator to those of the administering tribunal, citing to cases holding that “judicial review of arbitrator decisions is necessarily narrow” and that “even substantive decisions will not be overturned unless the arbitrator is not ‘even arguably construing or applying the contract.’”   Since the AAA here interpreted its rules as permitting the rejection of the matter, the court defers to that decision.

U.S. reviews of foreign state arbitration awards

LLC SPC Stileks v. Republic of Moldova, 2021 U.S. App. 1129 (D.C. Cir. Jan. 15, 2021) should be read on two different levels.  For those elbow-deep in investor state arbitration, it provides a detailed look into the relationship between the New York Convention and the Foreign Sovereignty Immunity Act.  The panel, Henderson, C.J., writing for herself and Circuit Judges Rogers and Ginsburg, after parsing the parties’ Energy Charter Treaty rejects Moldova’s FSIA immunity claim and holds that its arbitrability argument is a defense under the Convention. Also of interest primarily to those involved in international arbitrations, the court sets forth the factors to be considered in determining whether to adjourn, i.e., to stay, post-award proceedings when an application to vacate the award is pending in another jurisdiction, in this case the French courts.  Finally, on the international front, the court discusses the appropriate currency for setting damages.  The District Court awarded damages in U.S. Dollars, even though the demand to the panel had sought compensation in Moldovan lei. The issue became relevant because, over the decade long life of the proceeding, the lei decreased in value by approximately 30% against the dollar.  On a $58.6 Million award that difference is “real money.”

For those involved in domestic arbitrations, however, the case is noteworthy for its discussion of the award of prejudgment interest.   The panel starts from the proposition that the primary purposes of prejudgment interest are to “compensate the plaintiff for any delay in payment resulting from the litigation” and to “promote settlement and deter[] any attempt to benefit unfairly from inevitable litigation delay.”  It further seeks to make any award of pre-judgment interest “consistent with the underlying arbitration award.”  Here, although the arbitration panel was silent on prejudgment interest, it did award interest pre-award, opining that “the income which [Energoalliance] would have received if this amount had been used in its commercial activities is part of [its] loss and is to be reimbursed by [Moldova.]” (Brackets in original).  The court can “think of no reasoning” the same logic should not be applied to post-award, pre-judgment interest.  Whether this rationale should apply in the domestic context, where decisions to vacate or confirm happen relatively quickly, it certainly makes sense here, where the award was issued in 2012 and the case since then had moved through two levels of courts in Paris, had twice been addressed in the U.S., and was still pending on vacatur in France.  The opinion serves as a reminder to advocates in all arbitrations that they should address with the panel whether it is appropriate to award interest which continues to run until payment of any damages awarded.

Quick Hits –

Arbitration of Title VII Claims

In Waters v. Menards, Inc., 2021 U.S. Dist. LEXIS 8200 (E.D. Mich. Jan. 15, 2021), the court, Levy, J., compels arbitration of Plaintiff’s employment claims under Title VII of the Civil Rights Act of 1964 and Michigan’s equivalent.  The court focuses on language in the Defendant’s employment agreement which specifically mandates arbitration of statutory claims, including Title VII, and identifies those claims by name. The clause, which is quoted in the opinion, provides a good template for employers wishing to make their arbitration mandate very inclusive.  While it seems to make no difference in the court’s lengthy analysis, it is worth noting that Ms. Waters did not brief the matter; the court gives her five days to file a substantive response.

Petitions for Cert.

A new petition for certiorari has been filed with SCOTUS related to arbitration issues. In Seldin v. Estate of Silverman, Dkt. 20-895, petitioner seeks review of two issues –  whether an award can be set aside under the FAA because of public policy considerations and whether a finding of an arbitrator’s “evident partiality” can be based upon a reasonable impression of partiality or whether a challenger must present a showing of actual bias.  On the public policy issue, the petitioners claim a split between the Second, Fourth, Seventh and Ninth Circuits and the Supreme Court of Alaska on the side of finding an exception to enforcement under the FAA, while the Eleventh Circuit and the Supreme Courts of Alabama, Nebraska, and Florida reject that proposition.  On the bias issue, they claim a split between the Ninth and Eleventh Circuit and the Supreme Courts of Alabama and Texas which apply a “reasonable impression of partiality” test and the First, Second, Third, Fourth, Fifth, Sixth, and Seventh Circuits, which, along with the Supreme Court of Nebraska, allegedly apply an actual bias test.  A click through on the Scotus blog, Scotusblog.com, will take you to the petition.

As of this writing, there has been no decision on Henry Schein or any of the other pending cert. petitions.

See you on Wednesday.  Hopefully, this will be a quiet week.

David A. Reif
Reif ADR
Dreif@reifadr.com
Reifadr.com