Federal Employment Case Update | Pizza and Beer

Richard Birke

Richard Birke

By Richard Birke

Members of Certified Class Lack Standing to Challenge Class Arbitration Ban
Conners v. Gusano’s Chicago Style Pizzeria
United States Court of Appeals, Eighth Circuit

When Jacqueline Conners brought a class action lawsuit against her employer Gusano’s (alleging unlawful tip pooling practices), Gusano’s instituted an arbitration policy that required individual arbitration of any disputes.  Conners filed a motion seeking to have the court declare the new policy invalid because it interfered with the right of class members to communicate with other potential class members.  The trial court found this persuasive and granted the motion.  Gusano’s appealed.

The United States Court of Appeals for the Eighth Circuit vacated the lower court’s order, finding that Conners and the other members of the class lacked standing to contest a work requirement that did not apply to them. The Court wrote that “the former employees cannot gain standing here by defending the rights of current employees, not yet joined in the action.”

District Court Unjustified in Vacating Award
Raymond James Financial v. Fenyk
United States Court of Appeals, First Circuit

Robert Fenyk worked as a broker for Raymond James Financial (RJF) until he was terminated for alleged problems with alcohol. Fenyk filed a complaint in Vermont state court alleging he was fired because of his sexual orientation and his status as a recovering alcoholic. The complaint sought $665,000 in back pay, $588,000 in front pay, and $250,000 in punitive damages, with attorney’s fees and costs.  RJF argued that Fenyk was not an employee (but rather, an independent contractor) and therefore the Vermont employment laws didn’t apply to the case. They also moved to compel arbitration of all the remaining claims.

On the first day of arbitration, Fenyk moved to add a complaint under Florida law. The panel denied the motion as untimely. The panel issued an award of $600,000 for back pay based on discrimination and about $55,000 in fees.

RJF moved to vacate the award, arguing that the panel awarded damages under Florida law even though Fenyk brought no claims under Florida law, and even if he would have brought claims under Florida law, those claims would be time-barred. The district court granted the motion to vacate.

On appeal, Fenyk argued “that the district court erred in construing the Florida statute of limitations to bar his claim and improperly failed to defer to the arbitrators’ good faith effort to resolve the dispute.”  The United States Court of Appeals for the First Circuit held that the Florida statute of limitations should apply, but the Florida law did not apply the civil statute to arbitration until several weeks after the award and there was an open question about whether the statute applied to this kind of case. The Court concluded “any error by the panel in refusing to dismiss Fenyk’s claims as untimely does not rise to the level necessary to justify vacatur.”

The Court dealt with the claim that it was a mistake to apply Florida law in a similar way. They wrote “In the final analysis, the panel apparently decided that Fenyk’s mistake in labeling his claims did not justify denying him relief. Where the arbitrators applied the substantive law that RJFS agreed would govern its conduct, that choice to apply Florida law falls within the category of judgments—even if erroneous—that we may not disturb.”

The Court found that the award drew its essence from the contract and was therefore valid.  The Court concluded by writing “Accordingly, we reverse the decision of the district court and remand the case for entry of an order confirming the arbitration award.”

 

Mediation: Confidentiality and Enforceability

Kim Taylor, Esq.

Kim Taylor, Esq.

By: Kimberly Taylor, Esq.

An essential element of a successful mediation is confidentiality.  Participants to a mediation must be able to rely on the confidentiality of the process if they are going to be candid with the mediator about their settlement positions, pressure points, litigation strategy and other sensitive issues.  This principle is reflected in the Uniform Mediation Act, finalized in 2003 and adopted by 11 states to date, including Washington, Idaho, Utah, South Dakota, Nebraska, Iowa, Illinois, Ohio, New Jersey, Vermont and Hawaii.  According to the Act, “[t]his frank exchange can be achieved only if the participants know that what is said in the mediation will not be used to their detriment through later court proceedings and adjudicatory processes.”

Most ethics guidelines for mediators and some state statutes require that anything said, any writing or any admission made during a mediation is to be kept confidential, and that would include the terms of the settlement.  Standard V of the ABA Model Standards of Conduct for Mediators (Model Standards), adopted in 2005, directs that a mediator must “maintain the confidentiality of all information obtained by the mediator in mediation, unless otherwise agreed to by the parties or required by applicable law.”  JAMS Mediators Ethics Guidelines recognize that “[i]t is crucial that the mediator and all parties have a clear understanding as to confidentiality before the mediation begins…A mediator should not disclose confidential information without permission of all parties or unless required by law, court rule or other legal authority.”

What happens, however, if one party reneges on a settlement agreement and the other party wants to go to court to enforce it?  Or if the parties agree on basic terms of the deal, with details to be worked out later, and discussions break down?  “Settler’s remorse” can set in the day after a particularly emotional or contentious mediation session, leading to claims of coercion or fraud.  Can the parties or their lawyers introduce evidence to support the fact that an agreement was in fact reached?  Can a mediator be compelled to testify about the terms of a settlement agreement?

There is a clear tension between preservation of confidentiality on the one hand and the need on the other hand to introduce some facts about the mediation to enforce the agreement.  The Uniform Mediation Act attempts to reconcile this by not only providing for confidentiality, but also permitting a written agreement signed by all parties to be admitted in a later court proceeding.  Some states, like California, have statutes that provide that if a settlement agreement is signed by the parties during the mediation, it can be admitted in a later court proceeding if the agreement itself provides that it is admissible and that it is enforceable and binding and all parties agree to its disclosure.  The agreement might also be introduced if it is needed to show fraud, duress or illegality.  The Model Standards permit a mediator to “report, if required, whether parties appeared at a scheduled mediation and whether the parties reached resolution.”

For more on Ms. Taylor’s discussion on confidentiality and enforceability in mediation, please read the full article from Law.com.

Federal Court Case Update | Filings and Firings

Richard Birke

Richard Birke

By Richard Birke

Following is the start of a new series on the JAMS ADR Blog, featuring short synopses of recent case rulings related to arbitration or ADR. We’re excited to share this information as we know this is an area that will be of interest to our readers and those in the legal industry.

Mailing Equals Filing for Purposes of Determining Whether Arbitration Initiated in Timely Fashion
Garcia v. Dept. of Homeland Security
United States Court of Appeals, Federal Circuit

Alberto Garcia was dismissed from his job with Homeland Security for alleged misconduct. 28 days later, his union mailed a letter to the agency requesting arbitration. The agency received the letter seven days later.  The agency moved to dismiss the dispute for failure to follow the requirements of the collective bargaining agreement, which stated that requests for arbitration “must be filed … not later than 30 calendar days after the effective date of the action.” The arbitrator sided with the agency and Garcia appealed.

The United States Court of Appeal for the Federal Circuit analyzed the meaning of the word “filed” and found that in this context,  “the definition of ‘filed’ should be construed [to mean that] a document is filed at the time of mailing.” The Court concluded that “the requirement in Article 34, Section A that a request for arbitration must be filed … not later than thirty (30) calendar days after the effective date of [the Agency’s] action is satisfied when the request is mailed before the thirty-day deadline…Accordingly, we reverse the Arbitrator’s dismissal for failure to timely file a request for arbitration and remand for further proceedings.”

Subsequent Firing Does Not Conflict with Arbitral Award Requiring Reinstatement
Fraternal Order of Police (Metro Transit Police Labor Committee) v. Washington Metro Area Transit Authority
United States Court of Appeals, Fourth Circuit

The Fraternal Order of Police signed a collective bargaining agreement with a compact of jurisdictions associated with the metro D.C. transit system.  Two of the officers were terminated (for punching a passenger, lying under oath, sexually harassing a colleague and more).  After arbitration, they were reinstated.

The transit system rehired them and put them on paid leave while they applied for reinstatement as police officers. When the Maryland police authorities declined to reinstate the two, the transit system fired them because, without certification, they were ineligible to continue as transit officers.

FOP sued, arguing that transit failed to follow the arbitrator’s award. The trial judge agreed and ordered the pair reinstated. The judge denied transit’s motion for reconsideration and transit appealed.

The United States Court of Appeals for the Fourth Circuit reversed. It agreed with transit that the proper course of action for the aggrieved officers was to grieve and then arbitrate the second termination, not to file the instant action. Because transit rehired the pair until they were fired for an independent (if not unrelated) reason, transit had complied with the award.

 

Joint Sessions: Are Lawyers Right to Hate Them?

By Martin Quinn

Martin Quinn

Martin Quinn

Mention holding a joint session and you are sure to provoke an argument between mediators and teachers of mediation on one side and lawyers who represent clients in mediations on the other.  That dichotomy is not wholly accurate because many mediators have also abandoned the use of joint sessions.  As a mediator of well over a thousand business-oriented lawsuits and disputes for 20 years and as a law school teacher of mediation practice for almost 10 years, I will offer a few  thoughts and some experience on this divisive topic.  I come with a bias:  The disputes I mediate usually involve parties who have a business or relationship that is in tatters but just may be extended or rekindled.  This is frequently true of employment, neighborhood or landlord-tenant cases; disputes among contracting parties or business competitors; partnership, stockholder and family quarrels; and healthcare business disputes.  To a certain extent, despite the parties’ immediate differences, going forward they usually need each other or at least will benefit from a civil relationship.  Therefore, this article is of less relevance for personal injury and other cases in which the parties have never met before and are unlikely ever to meet again.

As envisioned in the classic mediation training, the mediation commences with all participants—the mediator, lawyers and clients—together in a room.  Such a meeting, it is thought, promotes many objectives.  It allows the mediator to demonstrate their expertise with the process and their mastery of the relevant facts; to obtain consensus on an agenda for addressing the key issues; to explain confidentiality principles; to assess the competence, preparation and styles of the lawyers; to begin to understand each party’s mind-set and needs; and generally, to set the tone for a collaborative discussion.  A joint session allows counsel to demonstrate confidence and readiness to try the case if it does not settle, to establish credibility with the mediator, to show off in front of their clients and critically, to speak directly to the opposing party.  The parties, it is said, benefit from a chance to “tell their story” to a receptive listener, to demonstrate both their confidence in their case and their openness to a reasonable settlement and possibly to mention non-legal personal and emotional motivations that they will need to have addressed.  Theoretically, the climate for negotiations will be improved by beginning the day with a conversation in which everyone is cautioned to speak respectfully and to listen attentively.

For more on Mr. Quinn’s discussion on Joint Sessions, please read the full article from Law.com.