Following are two interesting and recent federal court rulings related to arbitration.
Future Disputes are beyond Arbitral Authority
Minnesota Nurses Association v. North Memorial Health Care
After completing 30 years of service, Nurse Lynette Drake asked to be relieved of the obligation to work weekends. When her supervisor required her to report under a “needed-nurses” exception, Drake filed a grievance.
The arbitrator concluded that the exception was properly invoked. However, in order to ensure that Drake not be treated unfairly in the future, the arbitral award required that “from the date of this award, if the Employer invokes the “exception” proviso to compel qualifying nurses to work on weekends, the number of required weekends shall be equally shared (divided) among those qualifying nurses.”
The district court vacated the portion of the arbitrator’s award requiring that weekend shifts filled by qualifying nurses be divided equally among them. North Memorial appealed.
The United States Court of Appeals for the Eighth Circuit affirmed. Finding that the arbitrator exceeded his authority, the Court wrote, “The CBA has not delegated the arbitrator authority to resolve disputes not presented to him by the parties, and the extent of the dispute the parties have referred to arbitration is determined by the submission, not the CBA.” As the parties only submitted a single dispute about a past act, the arbitrator had no authority to fashion a remedy for hypothetical future disputes.
Employer Waived Right to Arbitrate
Messina v. North Central Distributing
Richard Messina sued North Central Distributing for terminating his employment contract after six months. Messina argued that the contract was for two years.
NCD removed the case to federal court. After several months, the parties filed a report with the court that mentioned negotiation and mediation, but not arbitration. Several months later, NCD moved to transfer venue. The lawyers for the parties were in frequent contact and arbitration was never mentioned.
Eight months after the filing of the case, NCD moved to compel arbitration pursuant to a clause in Messina’s employment contract. The district court denied the motion and NCD appealed.
The United States Court of Appeals for the Eighth Circuit affirmed. It found that NCD knew of its right to arbitrate, had acted inconsistently with that right (“substantially invoking the litigation machinery by…removing the case to federal court, filing an answer, participating in a pretrial hearing, filing a scheduling report which recommended a trial date and discovery deadlines, and filing a motion to transfer venue.”), and that these actions had caused prejudice to Messina who “spent considerable time and money obtaining new counsel, partaking in pretrial hearings, and responding to the transfer motion.”