“Attorneys Turn Back Their Sanctions Over Client’s Absence”

As discussed by Bloomberg Law in this article discussing the Eleventh Circuit’s decision in Miller v. Midland Credit Management, Inc., attorneys need not pay the price for a client who fails to show at a court-ordered mediation. The trial court, dissatisfied with the client’s failure to appear, directed counsel to “address whether they have regained contact with their client.” The court thereafter received an explanation from the client “that she did not attend the mediation because she was relieved of duty from work three hours late, and could not access her phone to inform her attorneys of this unexpected issue.”

The court responded with a sanctions order against both the client and her two attorneys. Reversing, the Eleventh Circuit disagreed, holding that the lower court provided no prior notification that it was considering sanctioning the attorneys. Nor did the court make a finding that the attorneys had engaged in the requisite bad faith to warrant a sanctions order against them. Sending the case back to the lower court, the Eleventh Circuit noted (“[i]It may be that the district court’s imposition of sanctions was based on a finding of bad faith and was supported by the record. At this time, however, we cannot make this determination.”

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More On 9th Circuit Decision Upholding Statutory Prohibition Against Mandatory Arbitration Of Employment Disputes

Yesterday, I flagged the Ninth Circuit’s divided decision upholding a California statute rendering unlawful an employer’s requirement that employees agree to the arbitration of disputes. The opinion already is generating commentary. Nancy Yaffe of Fox Rothschild has this article, describing the conundrum in which the decision places employers pending further review by the entire circuit (and possibly the U.S. Supreme Court), and Corey Cabral and Linda Wang of CDF Labor Law have authored this article, both of which are available at JD Supra.

“California bar on mandatory arbitration doesn’t violate FAA – 9th Circ.”

Reuters offers this analysis of yesterday’s Ninth Circuit ruling upholding a California statute rendering unlawful an employer’s requirement that employees agree to the arbitration of disputes. The panel, in a sharply divided 2-1 decision, held that the California statute is not preempted by the Federal Arbitration Act’s admonition that an agreement to arbitrate “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

The jurisprudence regarding the scope of arbitration preemption already is substantial, but this decision promises to kick off a new volley of litigation activity arising out of recent years’ debate about the appropriateness of arbitration of workplace disputes.

“Novel Massachusetts Decision Finds Waiver of Right to Compel Arbitration Based on Pre-Litigation Actions”

Greg Keating, Katherine Rigby and Fran DeLuca of Epstein Becker & Green have authored this article, available at The National Law Review, discussing the Massachusetts Superior Court decision in Hernandez v. Universal Protection Services. As they explain, while “[m]any employers are aware that they could waive the ability to enforce an arbitration agreement if they delay moving to compel arbitration until after they have engaged in significant litigation activities in court,” Hernandez is “novel and significant” because the court “found that an employer waived its right to compel arbitration based on its actions before an employee filed suit in court.”

The waiver-producing conduct occurred when an employee, alleging that the was a victim of sexual harassment, requested her personnel record. The company’s production, however, failed to include a copy of the arbitration agreement the employee signed. The company’s failure, according to the court, created “irreversible” prejudice since the employee, absent the arbitration agreement, filed suit in court.

As the article notes, since Hernandez is a trial court decision and therefore not binding in Massachusetts (and still may be reversed upon appeal).

“3rd Circuit Issues Precedential Opinion in Verizon Labor Arbitration Award Dispute”

Law/Street has this article, discussing the Third Circuit’s decision in Verizon Pennsylvania, LLC v. Communicatins Workers of America, AFL-CIO, Local 13000, in which the court reaffirmed the ongoing vitality of the functus officio doctrine: “we hold that it is alive and well in this Court.” Under the doctrine, as the article explains, “once an arbitrator, unlike a judge, issues a finding she may not modify it absent all parties’ consent.”

In the case before it, a union arbitration board determined that Verizon violated a collective bargaining agreement by arranging to have cable boxes shipped to customers rather than delivered by union technicians. The arbitrators went astray, however, when they subsequently expanded the scope of their award.

“How a Block Island marina dispute fractured trust in R.I. coastal agency”

Having recently returned from a trip to Block Island that included walks along the Great Salt Pond and past Champlin’s Marina, this article caught my attention. It critiques a mediation between Rhode Island’s administrative Coastal Resources Management Council and Champlin’s. The mediation resolved a longstanding dispute arising out of Champlin’s desire to expand its capacity from 225 to 365 boats. The dispute had worked its way up to the Rhode Island Supreme Court, and while the case was pending, the parties reached an agreement that, no surprise, permitted a more modest marina expansion.

Now the mediated agreement itself is being challenged by environmental groups, the Town of New Shoreham, and the Rhode Island Attorney General, who claim that the CRMC approved a settlement without public input. From a legal standpoint, the dispute raises the issue of a public agency’s ability to mediate and resolve disputes rather than letting them play out in accordance with the administrative legal process. In a broader sense, of interest to mediators and the attorneys who appear before them, the case emphasizes the importance of having all stakeholders participate if they want the settlement to bring finality to a dispute.

Employer’s Failure To Sign Arbitration Agreement Renders It Unenforceable

A recent decision by a Texas Court of Appeals provides a cautionary tale to employers seeking to implement a program of arbitrating employee disputes. In CC Restaurant, L.P. v. Olague, a divided appeallate panel affirmed the trial court’s denial of an employer’s motion to compel arbitration based upon the employer’s failure to sign the arbitration agreement it prepared and provided to its employee. The court referenced this language in the agreement:

The Parties expressly acknowledge and understand that by signing this Agreement, each is affirming that he/she/it has read and understands this arbitration provision; each is agreeing to be bound by it; each is waiving its respective rights to have a Dispute between or among them adjudicated by a court or by a jury; and each is waiving its respective rights to have a Dispute between or among them proceed as a class, collective, or consolidated action or arbitration.

As the court held, “the Agreement’s language specified the Employer’s signature was required for the Employer to be bound to arbitrate its claims against the Employee. The Employer did not sign the Agreement, however the Employee did, therefore, only the Employee agreed to arbitration.”

The court acknowledged that that, in addition to the agreement, the employer provided the employee with a notice referencing the agreement which called only for the employee’s signature (which was provided), “indicating both the Employee and the Employer are bound by the Agreement to arbitrate, as provided in the Agreement, by virtue of the Employee’s continued employment.” However, according to the court, while the employee’s signature,

may evidence the Employee’s agreement to arbitrate her claims against the Employer, the Motice itself provides no consideration on the part of the Employer for an agreement to arbitrate other than continuing employment, which is alone insufficient. There is no mutuality in its terms; instead, the Notice is predicated on the Agreement: it indicates the parties are bound by the Agreement as provided for in the Agreement.

The takeaway for employers endeavoring to implement arbitration programs: make sure the requisite documents are signed by all appropriate parties.

“Appellate Court affirms defendant waived the right to arbitration”

Lexology has published this article by Buckley discussing the Florida District Court of Appeals decision in Marino Performance, Inc. v. Zuniga, in which the court denied a motion tofo compel arbitration, holding that the movant “engaged in a litigation strategy of ‘outcome oriented gamesmanship.’” As the article explains, none of the movant’s seven affirmative defenses referenced arbitration, and it unsuccessfully moved for judgment on the pleadings. Only days before the scheduled court hearing on the motion for class certification did the movant, for the first time, raise arbitration as an issue. On these facts, and measured against “instructive” precedent, the court held that movant had waived its right to seek arbitration of the class claims.

“Mock Trial Mediation: A More Effective and Cathartic Settlement Tool”

I was recently made aware of this article, authored last year by Brian Moran of Robinson and Cole and Wendy Hufford of Ascena Retail Group, Inc. and available on ACC Docket. The authors interestingly suggest the use of a mock trial mediation as an alternative to what they describe as “the vagaries and uncertain outcome of the current passive, disengaged mediation process.” While perhaps not suited for all disputes, the article sets forth a protocol–indeed, two protocols–that may be beneficial in certain matters.