Employees Can Sue Even When Unions Have Arbitrated Claims
Published in
The Daily Journal, Forum Column,
October 2006
By Douglas N. Silverstein and Alexandra M. Steinberg
So you think that those
wage claims you arbitrated last month are resolved and your
employees can't sue? Think again.
More and more, employers are requesting - and often requiring -
employees to agree to arbitrate their claims, in theory to manage
the unpredictability of jury verdicts, reduce the cost of litigation
and obtain a quick decision. In the unionized workplace, grievance
and arbitration procedures are standard terms of collective
bargaining agreements. However, there are important limitations on
whether arbitration is final and binding, thus preventing employees
from additionally pursuing the identical claims in court.
In September, the 2nd District Court of Appeal held that a union did
not waive its members' statutory rights and the employees could sue
in court even though the union had grieved the same issue under the
collective bargaining agreement's grievance and arbitration
procedure. Zavala v. Scott Brothers Dairy, 2006 DJDAR 13130
(Sept. 28, 2006). Tempting though it may be to dismiss this as some
liberal aberration out of California, for more than 25 years the
United States Supreme Court has recognized that contractual rights
and statutory rights are different and that disputes arising under
them may be handled best in different fora. Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20 (1991). This is
because a union seeks to maximize collective interests, not
individual interests, and because a union arbitrator with
specialized competence "may not be conversant with the public law
considerations" underlying statutory rights. Barrentine v.
Arkansas-Best Freight System, 450 U.S. 728 (1981).
The recent decision stems from a 2005 class action filed by Robert
Zavala against his employer, Scott Brothers Dairy, for failure to
provide statutory rest breaks to its employees, failure to provide
properly itemized wage statements, and unfair competition. A month
before, the union grieved the rest break issue and resolved it with
the Dairy shortly after the lawsuit was filed. The collective
bargaining agreement provided for two 10-minute coffee breaks per
day - and binding arbitration for "all disputes or controversies
arising under [the] Agreement."
Arguing that Zavala's claims were pre-empted by Section 301 of the
Labor Management Relations Act and that he had agreed to arbitrate
his statutory rest break claims, the company moved to compel
arbitration. The trial judge denied the motion.
No Pre-emption for Statutory Rights
Barrentine made clear that statutory claims are generally not
pre-empted by federal labor law in the unionized workplace. Last
year, the 3rd District Court of Appeal applied the same rule to
California wage-and-hour laws. Cicairos v. Summit Logistics
Inc., 133 Cal.App.4th 949 (2005).
Simply put, rights granted by collective bargaining agreements are
contractual in nature, whereas statutory rights are minimum labor
standards that are nonnegotiable and cannot be pre-empted by federal
labor law. This applies whether the claim is for wage-and-hour
violations, as in Zavala, or other violations of statutory rights,
such as discrimination. Wright v. Universal Maritime Service
Corp., 525 U.S. 70 (1998). A prudent employer does not expend
resources by removing such cases to federal court and bringing
motions to dismiss based on pre-emption, because, absent some other
basis for federal jurisdiction, it will find itself remanded to
state court.
Statutory Rights Not Arbitrable
Under Zavala, an employer can recite a statute verbatim in its
collective bargaining agreement, then provide that all claims
arising under the contract are subject to mandatory arbitration -
and still find itself litigating those issues in court: "Mere
recital of the statutory requirements in the CBA does not render
arbitration of alleged violation of those statutory rights." In
theory, the union and the employer could agree to arbitrate at least
some statutory rights by making the waiver clear and unmistakable.
However, no known cases have found a waiver to meet these criteria.
More important, unions and employers typically don't want statutory
claims to be part of a collective bargaining agreement's grievance
and arbitration procedure because the courts are better equipped to
adjudicate such claims.
Whether a waiver ever would be upheld for wage-and-hour claims that
provide minimum labor standards such as rest periods or itemized
wage statements is questionable, because the state Legislature has
declared such rights to be nonwaivable under a collective bargaining
agreement. Labor Code Section 219.
What is clear and unmistakable is that the Legislature intends
employees to be able to bring their statutory rights for
wage-and-hour violations before the courts. With such a strong
position by the legislative and judicial branches, it makes little
sense for employers to bring a motion to compel arbitration when
faced with a statutory claim by a unionized employee.
No Claim/Issue Preclusion
The point of collateral estoppel and res judicata is to avoid having
to relitigate issues that have been adjudicated. No employer wants
to expose itself to a second round of defending claims if it can
resolve them once and for all. But that is exactly the case if a
unionized employee grieves a statutory claim, then sues in court for
the identical claims.
The Zavala court held that there was no collateral estoppel or res
judicata even where the rest break claims had been grieved fully to
resolution through the union's grievance and arbitration procedure.
Countless employees have been advised by plaintiffs' attorneys that
they do not have a remedy in court because their unions had grieved
identical issues. Zavala gives much-needed guidance that
employees still may file their claims in court.
Employers with unionized work forces should consider this carefully
in their contract negotiations. And, where an employee brings a
statutory claim in court, the employer is well-advised to stop
fighting the losing battle of forums and tackle the merits of the
claim.
The authors were trial and appellate class counsel in the Zavala case.