Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_08-cv-01211/USCOURTS-cand-4_08-cv-01211-0/pdf.json

Parties Involved:
Thomas Hicks
Respondent
Thomas Knowles
Respondent
Pacific Gas & Electric Company
Petitioner

Document Text:

United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In the matter of Arbitration

between

PACIFIC GAS & ELECTRIC

COMPANY,

Petitioner,

 and

THOMAS KNOWLES and THOMAS HICKS,

Respondents. /

No. CV-08-1211 CW

ORDER DENYING PG&E’S PETITION

TO VACATE ARBITRATION AWARD

Petitioner PG&E submitted a petition for an order vacating the

interim arbitration award entered in Respondents’ favor and a

motion to stay the arbitration proceeding. Respondents Thomas

Knowles and Thomas Hicks oppose PG&E's petition and motion. The

matter was taken under submission on the papers. Having considered

all of the papers filed by the parties, the Court DENIES PG&E’s

petition to vacate the interim arbitration award and DENIES PG&E’s

motion to stay arbitration proceedings.

Case 4:08-cv-01211-CW Document 14 Filed 05/05/08 Page 1 of 9
United States District Court

For the Northern District of California

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BACKGROUND 

Knowles and Hicks were employees of PG&E and were employed at

a PG&E power plant called the Geysers. PG&E operated the Geysers

until 1999, when it sold the plant. To ensure the new owners could

safely continue operations of the plant, the California Public

Utilities Commission required that PG&E enter into a two-year

agreement for the operation and maintenance of the plant (O&M

Period).

In 1997, PG&E and the union, the International Brotherhood

Electrical Workers, Local 1245 (IBEW), agreed upon a benefits

package for certain employees laid off due to the divestiture of

the power plants. The benefits package was memorialized in a April

14, 1997 Letter Agreement. The Letter Agreement applied only to

“Title 200 Steam Generation” employees. The Letter Agreement was

executed pursuant to §§ 400.1-4.00.4 of the Collective Bargaining

Agreement (CBA). The CBA granted qualified employees preferential

re-employment rights up to thirty months after a layoff. The

Letter Agreement increased the re-employment rights for certain

Title 200 Steam Generation employees to sixty months.

Knowles and Hicks worked at the Geysers until the end of the

two-year O&M Period. Knowles and Hicks voluntarily resigned from

PG&E in May, 2001, and in July, 2001, each entered into a written

Severance Agreement and Release. 

The Severance Agreement and Release states, in part:

Any dispute regarding any aspect of this

Severance Agreement and Release, including its

validity, interpretation, or any action which

would constitute a violation of this Severance

Agreement and Release (hereinafter referred to

as an “arbitrable dispute”) shall be resolved

Case 4:08-cv-01211-CW Document 14 Filed 05/05/08 Page 2 of 9
United States District Court

For the Northern District of California

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by an experienced arbitrator, selected by the

parties in accordance with the rules of the

American Arbitration Association. . . . The

parties agree that arbitration shall be the

exclusive remedy for resolving arbitrable

disputes and that the decision of the

arbitrator shall be final and binding.

Severance Agreement and Release at ¶ 11. 

In their arbitration papers, Knowles and Hicks allege that

PG&E, through its employee Deanna Radford, orally represented to

them that they were entitled to a sixty-month preferential reemployment benefit, which caused Respondents to work during the O&M

period and to wait until sixty-month period nearly ended before

seeking re-employment with PG&E. Kumagai Dec., Ex. 2 at 1-3. When

Knowles and Hicks both requested re-employment, PG&E denied their

requests and denied ever making such promise of re-employment. Id.

at 2. 

PROCEDURAL HISTORY

On August 23, 2006, Knowles and Hicks filed an action in state

court against PG&E for failing to provide them a sixty-month

preferential re-employment benefit, alleging state law causes of

action. See Knowles v. Pacific Gas & Electric, case number CGC-06-

455483. On October 30, 2006, Knowles and Hicks voluntarily

dismissed that case without prejudice in order to pursue

arbitration.

On or about January 12, 2007, Knowles and Hicks filed demands

for arbitration with the American Arbitration Association, in which

they alleged that PG&E breached its contractual obligations that

guaranteed them employment benefits and preferential rights to reemployment. 

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United States District Court

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At the time PG&E filed its motion to dismiss, Radford had not

yet been served.

4

On March 1, 2007, PG&E filed an objection to jurisdiction and

arbitrability of claims, a response to the demand for arbitration

and a counterclaim. On March 21, 2007, Knowles and Hicks filed a

response to PG&E’s counterclaim in which they provided a more

descriptive restatement of their claims. The Arbitrator summarized

Knowles and Hicks’ claim as follows:

1. They were entitled to a 60 month

preferential right to re-employment because: 

a. They were covered by a certain 

agreement between PG&E and IBEW that 

contained these rights, and 

b. PG&E personnel specifically promised 

them preferential re-employment rights, 

upon which they relied, before they 

entered into the Severance Agreement and 

Release.

Interim Award at 3-4. 

On June 29, 2007 Knowles and Hicks opposed PG&E’s

counterclaim. They argued that their breach of contract claim was

based on the fact that they were classified as Base Personnel

employees and that this classification conferred upon them the

entire benefits package provided to Steam Generation employees,

including preferential re-employment rights. 

Meanwhile, on April 26, 2007, Knowles and Hicks filed a new

federal complaint against PG&E and Deanna Radford, a PG&E employee,

alleging the same state causes of action they had stated in their

original complaint in state court.

On November 29, 2007, this Court granted, with leave to amend,

PG&E's motion1 to dismiss Knowles and Hicks’ complaint, concluding

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that Knowles and Hicks’ state law causes of actions for: (1) breach

of contract; (2) specific performance; (3) breach of the implied

covenant of good faith and fair dealing; and (4) age discrimination

under FEHA were preempted by § 301 of the Labor Management

Relations Act (LMRA). The Court granted leave to amend to state a

claim under the LMRA. The Court also dismissed the fraud claim,

granting leave to amend to plead fraud with particularity as

required by Federal Rule of Civil Procedure 9(b). 

On November 16, 2007, PG&E sent Arbitrator Brand a letter

informing him of the Court’s order granting PG&E’s motion to

dismiss based on LMRA preemption. PG&E requested a stay of the

arbitration proceeding until final determination of the civil

action or acknowledgment that the Court’s rulings were correct and

applied to the claims raised in the arbitration. On November 20

and 27, 2007, Knowles and Hicks sent letters in opposition to

PG&E’s letter and informed Arbitrator Brand that the Court granted

them leave to amend the complaint to allege claims under Section

301. 

On December 3, 2007, Arbitrator Brand issued an interim award

granting in part and denying in part PG&E’s motion to dismiss as

follows:

1. Claimants’ assertion they are entitled to a

sixty month preferential right to rehire under

the “Employee Severance and Displacement Plan”

contained in the CBA is not arbitrable.

2. Claimants’ age discrimination claim is not

arbitrable.

3. Claimants’ allegation of an oral agreement

to provide them a sixty month preferential

right to rehire – as part of the Severance

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Agreement and Release, or to induce them to

sign it – is arbitrable.

4. Claimants’ assertion of violation of the

covenant of good faith and fair dealing is

arbitrable.

Interim Award at 11. 

On February 27, 2008, PG&E filed this petition to vacate the

arbitrator’s interim award and to stay arbitration. PG&E asserts

that Arbitrator Brand exceeded his powers and acted in manifest

disregard of the law because: (1) the severance agreements are

fully integrated and were the parties’ final expression of their

agreement, (2) no writing exists establishing an agreement to

arbitrate oral contacts between the parties, and (3) Arbitrator

Brand improperly found that some of Knowles and Hicks’ claims were

not preempted by § 301. Knowles and Hicks oppose this petition.

Legal Standard

I. Vacating Interim Arbitration Awards

Under the Federal Arbitration Act (FAA), courts may review

final arbitration awards; however, no interlocutory review is

intended of interim awards. 9 U.S.C. § 1 et seq.; Millmen Local

550, United Broth. of Carpenters and Joiners of America, AFL-CIO v.

Wells Exterior Trim, 828 F.2d 1373, 1376 (9th Cir. 1987); Pacific

Bell v. Covad Communications Co., 1999 WL 390840, at *2 n.1 (N.D.

Cal.). Only in the most extreme cases will judicial review of a

non-final award be proper. Aerojet-General Corp. v. American

Arbitration Ass'n, 478 F.2d 248, 251 (9th Cir. 1973). To allow

judicial intervention prior to the final award would contravene the

fundamental federal policy of deference to contractual dispute

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resolution procedures, and would interfere with the purpose of

arbitration: the speedy resolution of grievances without the time

and expense of court proceedings. United Steelworkers v. American

Mfg. Co., 363 U.S. 564, 566-68 (1960); Kemner v. District Council

of Painting and Allied Trades No. 36, 768 F.2d 1115, 1118 (9th Cir.

1985); Aerojet-General, 478 F.2d at 251; Pacific Bell, 1999 WL

390840, at *2. Moreover, interlocutory review of non-final

arbitration awards would defeat the purpose of 28 U.S.C. § 1291 to

avoid piecemeal litigation of a claim. See, e.g., Cohen v.

Beneficial Industrial Loan Corp., 337 U.S. 541, 546 (1949);

Liberian Vertex Transports, Inc. v. Associated Bulk Carriers, Ltd.,

738 F.2d 85, 87 (2d Cir. 1984). 

II. Stay of Arbitration 

The decision whether to stay arbitration proceedings is

committed to the discretion of the district court. Sheet Metal

Workers' Intern. Ass'n, Local No. 252 v. Standard Sheet Metal, 1.

Inc., 699 F.2d 481 (9th Cir. 1983).

DISCUSSION

I. Vacating Arbitrator’s Interim Award

PG&E petitions the Court to vacate Arbitrator Brand’s interim

award, pursuant to the FAA, 9 U.S.C. § 10(a)(4). Arbitrator Brand

found that PG&E’s alleged oral promise to Knowles and Hicks was not

preempted by § 301 of the LMRA and was therefore arbitrable. 

However, Arbitrator Brand expressly stated that his interim award

did not include “judgment about the merits of the claim there was

an oral agreement to provide Claimants a sixty month re-hire

right.” Interim Award at 7. Because this award is not final, it

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is not reviewable by this Court. 

Although judicial review of interim awards is allowed in

extreme cases, Aerojet-General Corp., 478 F.2d at 251, PG&E has not

offered any compelling reason for immediate review. PG&E argues

that Arbitrator Brand exceeded his authority and acted in manifest

disregard of the law when he found the alleged oral promise

arbitrable. The FAA provides these grounds for vacating a final,

but not an interim, arbitration award. See 9 U.S.C. § 10. PG&E

has not explained what irreparable harm or injury this interim

award will cause it. The Court does not find this to be an extreme

case warranting an exception to the general rule.

For these reasons, the Court denies PG&E’s petition to vacate

the interim arbitration award. 

II. Staying Arbitration

PG&E also asks the Court to stay the arbitration proceedings

pending resolution of the federal civil action. Because the Court,

by separate order, dismisses Knowles and Hicks’ complaint without

leave to amend, this request is moot. 

Accordingly, the Court DENIES PG&E’s motion to stay the 

arbitration. 

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CONCLUSION

For the reasons explained above, PG&E’s petition to vacate

Arbitrator Brand’s Interim Award and motion to stay the arbitration

proceedings are DENIED. The Clerk shall enter judgment. Each

party shall bear its own costs. 

IT IS SO ORDERED.

Dated: 5/5/08 

CLAUDIA WILKEN

UNITED STATES DISTRICT JUDGE

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