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.”


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.


The Small Big: Small Changes That Spark Big Influence

Richard Birke

Richard Birke

Written by Steve J. Martin, Noah J. Goldstein and Robert B. Cialdini

Reviewed  by Richard Birke

Nothing is more important to negotiation success than getting the other side to say yes.  The formal study of this critical aspect of negotiation is called “persuasion science,” and no expert is more accomplished or recognized in this endeavor than Robert Cialdini, professor emeritus of psychology at Arizona State University.

Influence described six principles that accounted for the vast percentage of successful attempts to persuade.  These principles, briefly, are as follows:

The Small Big:  Small Changes That Spark Big Influence

The Small Big: Small Changes That Spark Big Influence

Reciprocation of Concessions:  People feel obliged to reciprocate for acts of goodwill, even if the act produces no value and was not requested or wanted.

Authority:  Perceived authority causes changes in decision-making, even when the authority is more imagined than real.

Scarcity or Deadlines:  Fleeting offers or disappearing commodities seem more valuable than if they were plentiful or available on request.

Social Proof:  If a choice appears to be endorsed by a large number of strangers, a negotiator is likely make the same choice.

Liking:  People say yes more to people they like.

Commitment and Consistency:  People tend to stay consistent with prior commitments they have made, even if those commitments were made without any deliberation.

The stories and lessons from Influence are entertaining, important and fairly short.  One quick read will demonstrate clearly why this book is so well-regarded. Each example forms the basis for a chapter in the book, and for the reader with limited time, the book is perfect.  It really lives up to its title—small chapters with BIG lessons.

Here are two of my favorite tips and lessons from The Small Big, even further shortened:

Simply adding the phrase “the majority of people in your postal code pay their taxes on time” resulted in the British government’s hiking its collection rate of delinquent taxes from 57 percent to 86 percent.  The cost of the change was practically zero (the biggest part was probably Cialdini’s fee), and the net increase was 270 million pounds annually.  This is an application of the principle of social proof, and the chapter offers clear advice for anyone seeking to collect on monies owed.

Requesting that a patient write down their own appointment information (rather than having the receptionist do it) resulted in an 18 percent reduction in the number of people who failed to show up for their next appointment.  In a demonstration of the principle of commitment and consistency, the authors teach us how to prevent missed appointments from creating large costs.  The estimate of the cost of missed appointments in the U.K. is more than a billion dollars a year.  This small change saves a nation $180 million and offers a lesson for any lawyer, restaurant or businessperson who suffers when someone blows off a meeting or appointment.

There are so many more great stories and lessons that anyone interested in negotiating their way to a yes really owes it to themselves and their clients to read The Small Big.  It will surely point to some small ways for you to make a big difference in the success of your negotiations.


Tomorrow’s Lawyers: An Introduction to Your Future

Richard Birke

Richard Birke

Written by Richard Susskind
Reviewed  by Richard Birke

In his book Tomorrow’s Lawyers, Richard Susskind writes, “Tomorrow’s legal world, as predicted and described here, bears little resemblance to that of the past.  Legal institutions and lawyers are at a crossroads, I claim, and are poised to change more radically over the next two decades than they have over the last two centuries.”

Susskind sees three major forces driving change in how legal services are provided.  The first is something he calls the “more-for-less challenge.”  As the name suggests, this driver involves clients asking lawyers to deliver more services for less money.  One simple example of this principle is found in large corporate clients who demand that their in-house counsel reduce expenses—sometimes by as much as 30 to 50 percent—at a time when the amount of compliance work and due diligence is increasing.  Susskind sees this as a factor that will “irreversibly change the way lawyers work.”

Tomorrow's Lawyers: An Introduction to Your Future

Tomorrow’s Lawyers: An Introduction to Your Future

The second driver is liberalization, non-lawyers doing work formerly done exclusively by lawyers.  Accountants, real-estate brokers, insurance adjusters and others have long been doing work that was once the exclusive province of members of the bar, and Susskind sees this trend continuing.  Banks will take over work, lawyers’ assistants in Second World and Third World countries will take over work and legal “partnerships” involving many non-lawyers will take over lawyers’ work.

The third driver is information technology.  Computers have already revolutionized the way discovery is handled, and document searches are now more likely to be conducted by electronic means.  Many legal documents are available online, and with the continued growth of computing power, it is likely that pseudo-legal reasoning will soon become part of the future of technology.

However, despite the potentially dire future predicted by these three drivers, Susskind is not entirely pessimistic about the future of lawyers.  He sees a world in which most lawyers will occupy different roles in the future than those they had in the past.  In Susskind’s world, new lawyers will guide clients through form filling more often than form creation.  Lawyers will sell and provide more routine services than they will create novel approaches to the resolution of common and age-old problems (like writing a will or renting an apartment).

In the midst of this rather unexciting world of form filling, Susskind sees some remaining role for lawyers to act as negotiators and researchers.  He describes transactions and litigation as “decomposed.”  Transactions decompose into nine categories:  due diligence, legal research, transaction management, template selection, negotiation, bespoke drafting, document management, legal advice and risk assessment.  Litigation similarly decomposes into nine categories:  document review, legal research, project management, disclosure, strategy, tactics, negotiation and advocacy.  It is notable that only legal research and negotiation appear in both realms.

No one is left untouched.  There are cautions and advice for educators, older lawyers, newer lawyers, managers of law firms, consumers of legal services, paralegals and others.  For the older lawyers, the advice is simple:  Change or die.  For the younger, the advice is stark:  “You will find most senior lawyers to be of little guidance in this quest [to shape the new practice].  They will resist change and will often want to hang on to their traditional ways of working, even if they are well past their sell-by date.”

And then, in the next-to-last line, Susskind reveals the last bit of advice he has for tomorrow’s lawyers.  He says, “In truth, you are on your own.”

The book is short, fewer than 170 pages.  It’s challenging, to existing practices and the future of law.  It’s well-written and entertaining.  But is it accurate?  Certainly, the trends Susskind has identified are real, but there’s no certainty that the future will come as quickly as Susskind suggests.  But one thing is certain, it’s worth the short investment in time that it will take to discover Susskind’s prognostications.  Even if 10 percent of them turn out to be right, that represents a huge change.  Personally, I think the ideas are right on target, but I think the timeline is a bit too short.  Nonetheless, Tomorrow’s Lawyers is well worth reading.

This article was originally published in the JAMS Dispute Resolution Alert Newsletter, Summer 2014 edition.