Opinion ID: 1127461
Heading Depth: 3
Heading Rank: 2

Heading: The arbitration cases.

Text: The Court of Appeal reviewed only the arbitration cases and concluded, correctly, that under these decisions the availability of arbitration, and the plaintiffs' participation in that arbitration without seeking judicial review of the arbitrator's decision, did not preclude this section 1983 action. In the first of the decisions relied on by the Court of Appeal, Alexander v. Gardner-Denver Co. (1974) 415 U.S. 36 [39 L.Ed.2d 147, 94 S.Ct. 1011], pursuant to a grievance/arbitration provision of a union contract, the plaintiff's union had processed the plaintiff employee's complaint that he had been discharged unjustly through mediation and arbitration proceedings in which a claim of racial discrimination had been made. The arbitrator ruled that plaintiff had been discharged for cause. Before that ruling was made, however, plaintiff had filed a racial discrimination complaint with the state Civil Rights Commission and that complaint had been referred to the Equal Employment Opportunity Commission (EEOC). Several months after the arbitrator's ruling, following an EEOC ruling against him, plaintiff filed a civil action under 42 United States Code section 2000e-2(a)(1), title VII of the Civil Rights Act of 1964 (Title VII), alleging that his discharge resulted from a racially discriminatory employment practice. The district court granted summary judgment for the defendant employer, ruling that plaintiff had voluntarily elected to pursue his grievance to final arbitration pursuant to the collective bargaining agreement, was bound by the arbitral decision, and therefore could not sue the employer under Title VII. The court of appeals affirmed. The Supreme Court reversed, holding that the contractual arbitration remedy and the statutory Title VII action differed in their purpose, in the questions presented and resolved, and in the procedures followed. [7] The court found no congressional intent in Title VII to restrict access to the remedies it provided and held that the grievance/arbitration remedy and Title VII remedies were parallel and cumulative. There could be no waiver of the right to a Title VII action by virtue of the collective bargaining contractual agreement because that would defeat the congressional purpose underlying Title VII. The court also held that it was not required to give deference to the arbitral decision. Arbitration, it held, was not an appropriate forum for resolution of Title VII disputes, as the arbitrator's task was not to carry out the requirements of the statute, the arbitrator typically was selected because of expertise in the law of the shop, not legal knowledge, and the factfinding process in arbitration was not equivalent to that in a judicial forum. The record of the arbitration proceedings is not as complete; the usual rules of evidence do not apply; and rights and procedures common to civil trials, such as discovery, compulsory process, cross-examination, and testimony under oath, are often severely limited or unavailable. ( Alexander v. Gardner-Denver Co., supra, 415 U.S. at pp. 57-58 [39 L.Ed.2d at p. 163].) The court concluded, on that basis, that the federal policy favoring arbitration of labor disputes and the federal policy against discriminatory employment practices can best be accommodated by permitting an employee to pursue fully both his remedy under the grievance-arbitration clause of a collective-bargaining agreement and his cause of action under Title VII. ( Id. at pp. 59-60 [39 L.Ed.2d at pp. 164-165].) Alexander v. Gardner-Denver Co., supra, 415 U.S. 36, was followed by Barrentine v. Arkansas-Best Freight System (1981) 450 U.S. 728 [67 L.Ed.2d 641, 101 S.Ct. 1437], in which the Supreme Court reached the same conclusion with regard to a union's unsuccessful presentation of employee wage claims to a grievance panel, followed by a suit under the Fair Labor Standards Act (FLSA) (28 U.S.C. § 201 et seq.). In a separate count of the FLSA action, the employees sought to have the decision of the grievance panel set aside on the ground that the union had breached its duty of fair representation. Both the district court and the court of appeals concluded that the FLSA claim could not be pursued because the employees had voluntarily submitted their grievance to binding arbitration. Again the Supreme Court reversed. The court acknowledged the tension between the policies underlying collective bargaining and statutory protection of the nonwaivable substantive rights to wage and hour benefits in the FLSA. It concluded, however, that those statutory rights might be lost if submission of a claim to arbitration precluded a later suit under the FLSA in federal court. This could occur for two reasons. The union, which processes such claims rather than the employee individually, might fail to vigorously present the employee's claim. The interest of the union, the court noted, lay in maximizing overall member compensation, not in ensuring that individual employees received the best possible compensation deal. Moreover, an arbitrator might not be knowledgeable about the public law considerations underlying the FLSA. Therefore, the arbitrator might not be competent to decide the ultimate legal issue of whether the statute had been violated, and, even if competent to do so, might not have the contractual authority to do so. The arbitrator might be required to carry out the intent of the collective bargaining agreement, rather than implement the statute. Finally, the court again noted the distinction between contractual arbitration and the judicial remedy, in which the arbitrator may award only that relief provided for in the collective bargaining agreement. Reaffirming its decision in Alexander v. Gardner-Denver Co., supra, 415 U.S. 36, the court held that the FLSA rights petitioners seek to assert in this action are independent of the collective-bargaining process. They devolve on petitioners as individual workers, not as members of a collective organization. They are not waivable. Because Congress intended to give individual employees the right to bring their minimum-wage claims under the FLSA in court, and because these congressionally granted FLSA rights are best protected in a judicial rather than in an arbitral forum, we hold that petitioners' claim is not barred by the prior submission of their grievances to the contractual dispute-resolution procedures. ( Barrentine v. Arkansas-Best Freight System, supra, 450 U.S. at p. 745 [67 L.Ed.2d at pp. 656-657].) In the next case, McDonald v. West Branch (1984) 466 U.S. 284 [80 L.Ed.2d 302, 104 S.Ct. 1799], arbitration of a labor grievance claiming no just cause for the plaintiff's discharge again preceded the federal court action. This time, however, a section 1983 action was the legal action. The plaintiff alleged that he had been discharged for exercising his First Amendment rights to free speech and association and to petition the government. The jury returned a verdict in favor of the plaintiff, a former policeman, against the chief of police, but the court of appeals gave preclusive effect to the unappealed arbitral decision, holding that the First Amendment claims were barred by the doctrines of res judicata and collateral estoppel. The Supreme Court reversed after concluding that, as in the statutes at issue in Alexander v. Gardner-Denver Co., supra, 415 U.S. 36, and Barrentine v. Arkansas-Best Freight System, supra, 450 U.S. 728, Congress intended that section 1983 be judicially enforceable. As in the FLSA and EEOC decisions, arbitration could not provide an adequate substitute for judicial proceedings in adjudicating the plaintiff's statutory claims, and giving the award preclusive effect would undermine that statute's efficacy in protecting federal rights. ( McDonald v. West Branch, supra, 466 U.S. at p. 290 [80 L.Ed.2d at p. 308].) The court stated once more the factors that led it to that conclusion: (1) An arbitrator may not ... have the expertise to resolve the complex legal questions that arise in § 1983 actions. ( McDonald v. West Branch, supra, 466 U.S. at p. 290 [80 L.Ed.2d at p. 308].); (2) under the contract provisions, the arbitrator might not have the authority to enforce section 1983, and, if there was a conflict between the employee's statutory rights and the collective bargaining agreement, the arbitrator was bound to enforce the latter; (3) the union had exclusive control over the presentation of the grievance to the arbitrator, and its interests might not be identical to or even compatible with those of the employee it represented; and (4) arbitral factfinding is generally not equivalent to judicial fact-finding. As we explained in Gardner-Denver, `[t]he record of the arbitration proceedings is not as complete; the usual rules of evidence do not apply; and rights and procedures common to civil trials, such as discovery, compulsory process, cross-examination, and testimony under oath, are often severely limited or unavailable.' ( Id. at p. 291 [80 L.Ed.2d at p. 309].) Hudson, supra, 475 U.S. 292, postdates these decisions. It differed from them in that it involved an action by nonmembers against a union. The nonmembers' First Amendment-based claims, which challenged the union's calculation of the  Abood amount, i.e., the proportionate share of political and ideological expenses that they were entitled to exclude from their compulsory payment, were brought under section 1983. In the court of appeals, however, they challenged only the procedure by which the amount of the deductions was determined and by which the union responded to objections from dissenters. Therefore, the court did not decide how the contractual grievance/arbitration decisions summarized above affect a section 1983 action that challenges a union's calculation of the Abood amount and that is decided after arbitration of a similar challenge. Discussing the union's procedure for responding to a dissenter's challenges, however, that court stated that a a full-dress administrative hearing, with evidentiary safeguards was not part of the necessary constitutional minimum requirement. ( Hudson, supra, 475 U.S. at p. 308, fn. 21 [89 L.Ed.2d at p. 248].) Instead, the court said, we think that an expeditious arbitration might satisfy the requirement of a reasonably prompt decision by an impartial decisionmaker, so long as the arbitrator's selection did not represent the Union's unrestricted choice but [t]he arbitrators' decision would not receive preclusive effect in any subsequent § 1983 action. See McDonald v. West Branch, 466 U.S. 284 [80 L.Ed.2d 302, 104 S.Ct. 1799] (1984). ( Ibid. ) The court appears to have assumed, therefore, that arbitration of the Abood amount does not preclude a subsequent section 1983 action. The arbitration procedure was suggested only as an expeditious means of resolving narrow questions of deductibility and avoiding infringement of First Amendment rights pending that resolution, not as a substitute for, or prerequisite to, a section 1983 action. ( Hudson, supra, 475 U.S. at p. 292, fn. 20 [89 L.Ed.2d at pp. 247-248].) That assumption is also reflected in the concurring opinion of Justice White, in which the Chief Justice joined, which stated that if the union provides for arbitration and complies with the other requirements specified in our opinion, it should be entitled to insist that the arbitration procedure be exhausted before resorting to the courts. ( Hudson, supra, 475 U.S. at p. 311 [89 L.Ed.2d at p. 250] (conc. opn. of White, J.).) Recently, however, the Supreme Court distinguished the pre- Hudson decisions in Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20 [114 L.Ed.2d 26, 111 S.Ct. 1647] on the basis that they were not decided under the Federal Arbitration Act. In Gilmer, a securities representative had been required by his employer to register with the New York Stock Exchange. The registration application included an agreement to arbitrate any dispute arising out of the employment or termination of the employment. Without doing so, the employee, who had been discharged from employment, initiated age discrimination proceedings before the EEOC and then filed suit under the Age Discrimination in Employment Act of 1967 (ADEA), 29 United States Code section 621 et seq. The district court, relying on Alexander v. Gardner-Denver Co., supra, 415 U.S. 36, denied the employer's motion to compel arbitration, reasoning that Congress intended to protect ADEA claimants from waiver of the judicial forum. The court of appeals reversed and the Supreme Court affirmed its judgment, holding the plaintiff had not established that Congress intended to preclude mandatory arbitration of ADEA claims. The court reasoned that the plaintiff had agreed voluntarily to arbitrate his statutory claim; the claim could be effectively vindicated in the arbitral forum; and mandatory arbitration was consistent with the flexible approach of the ADEA to resolving claims by informal methods which included conciliation, conference and persuasion, and with Congress's grant of concurrent jurisdiction to state and federal courts. In reaching its decision, the court rejected some of the arguments it found dispositive in the Abood amount cases  those regarding the competence of the arbitrator, the adequacy of discovery, and the scope of available relief. Without discussing the arbitrator's lack of expertise in resolving ADEA legal issues, the court said that under the New York Stock Exchange rules competent, unbiased arbitrators were available. It also said that it was unlikely age discrimination cases would require more discovery than that permitted in RICO (Racketeer Influenced and Corrupt Organizations Act; 18 U.S.C. § 1961 et seq.) and antitrust claims it had found to be arbitrable, but it also noted that there had been no showing that the New York Stock Exchange discovery provisions would be insufficient to afford ADEA claimants a fair opportunity to present their claims. Gilmer v. Interstate/Johnson Lane Corp., supra, 500 U.S. 20, does not appear to be a controlling departure from the earlier arbitration cases, however. In Gilmer, the court emphasized that by agreeing to arbitrate the plaintiff had traded the more extensive procedures available in the federal court for the simplicity, informality, and expedition of arbitration. The court rejected an argument that the purposes of the ADEA could not be adequately carried out because arbitration did not allow for broad equitable relief and class actions. The arbitrator could fashion equitable relief, and class actions could be brought by the EEOC. The court explained why Alexander v. Gardner-Denver Co., supra, 415 U.S. 36, and its progeny were not controlling. In those cases, the court said, the employees' statutory rights were distinct from their contractual rights, and the labor arbitrator had authority to decide only contractual rights. Moreover, those cases did not involve the issue of the enforceability of an agreement to arbitrate statutory claims. Rather, they involved the quite different issue whether arbitration of contract-based claims precluded subsequent judicial resolution of statutory claims. Since the employees there had not agreed to arbitrate their statutory claims, and the labor arbitrators were not authorized to resolve such claims, the arbitration in those cases understandably was held not to preclude subsequent statutory actions. Second, because the arbitration in those cases occurred in the context of a collective-bargaining agreement, the claimants there were represented by their unions in the arbitration proceedings. An important concern therefore was the tension between collective representation and individual statutory rights, a concern not applicable to the present case. Finally, those cases were not decided under the FAA, which, as discussed above, reflects a `liberal federal policy favoring arbitration agreements.' ( Gilmer v. Interstate/Johnson Lane Corp., supra, 500 U.S. at p. 35 [114 L.Ed.2d at p. 43].) Gilmer, on which the State Bar relied in the Court of Appeal, is distinguishable from the previous arbitration cases for the reasons stated by the Supreme Court in its opinion and recognized by the Court of Appeal in its opinion. It is also distinguishable from this action, in that it did not involve a section 1983 action. Here, too, the arbitration was not voluntary. Plaintiffs at no time agreed to surrender their right to a section 1983 action. The arbitrator, who plaintiffs assert had no legal training, could grant only part of the relief sought a refund of part of plaintiffs' State Bar dues. He could not grant declaratory relief or enjoin future violations of plaintiffs' constitutional rights or make any ruling that would bind the State Bar in the future in identifying those activities for which objecting members' dues may not be used without violating the members' First Amendment rights. In this court, the State Bar has abandoned its previous reliance on Gilmer, and instead relies on the reasoning of the United States District Court in Bromley v. Michigan Educ. Ass'n-NEA (E.D.Mich. 1994) 843 F. Supp. 1147 ( Bromley II ), and Bromley v. Michigan Educ. Association-NEA (E.D.Mich. 1993) 815 F. Supp. 220. The State Bar argues that those decisions applied reasoning similar to that in Gilmer in concluding that the Hudson/Keller type procedures at issue there were more analogous to judicial factfinding and thus could be relied on in a subsequent section 1983 action. One reason for that conclusion was the court's belief that the arbitration procedure would be a waste of resources if the arbitrator's findings and the record were not given great weight. As the court of appeals reasoned in Hohe v. Casey (3d Cir.1992) 956 F.2d 399, 409, however, the time is not wasted if it offers a potential for avoiding litigation. Plaintiffs note, moreover, that the Bromley litigation has not been concluded, and that the court's other holdings in those decisions have greater relevance here. In Bromley II the court recognized the primary importance of diligent judicial review of the activities a union deems chargeable. ( Bromley II, supra, 843 F. Supp. at p. 1153.) It held, consistent with the Supreme Court's arbitration decisions, that the arbitration record and findings were to be given only as much deference as is consistent with section 1983. It also recognized that the issue to be determined in a 1983 action is not the correct amount of the fee to be charged the union member, but the constitutional validity of the union's definitions of categories of chargeable activities and expenditures. (843 F. Supp. at p. 1154.) Moreover, the State Bar's reliance on Bromley is inconsistent with the United States Court of Appeals for the Tenth Circuit's holding in Palmer v. City of Monticello (10th Cir.1994) 31 F.3d 1499, where the court made it clear that whether evidence of an arbitration proceeding should be admitted in a section 1983 action is left to the discretion of the trial court based on the nature of the particular administrative or arbitration proceeding. There, considering defendant's claim that the trial court had erred in excluding evidence of a prior administrative hearing, which the court concluded was more like an arbitration, the court held that there was no error. The Supreme Court has held that arbitrations and other types of non-judicial dispute resolution devices are not substitutes for judicial resolution of § 1983 claims. See McDonald v. City of West Branch, Michigan, 466 U.S. 284, 290-92, 104 S.Ct. 1799, 1803-04, 80 L.Ed.2d 302 (1984); see generally Atchison, T. & S.F.R. Co. v. Buell, 480 U.S. 557, 564-65, 107 S.Ct. 1410, 1414-16, 94 L.Ed.2d 563 (1987) (`This Court has, on numerous occasions, declined to hold that individual employees are, because of the availability of arbitration, barred from bringing claims under federal statutes.') (citing McDonald, 466 U.S. 284 [80 L.Ed.2d 302, 104 S.Ct. 1799]) (other citations omitted). The fact-finding that occurs in arbitration is simply not the same as that which occurs in a federal court.... [¶] Therefore, federal courts are given discretion to decide whether to admit or exclude evidence of arbitral proceedings, keeping in mind that Congress intended that § 1983 claims be resolved judicially as fully as possible. See id. at 292 n. 13, 104 S.Ct. at 108, n. 13. ( Palmer v. City of Monticello, supra, 31 F.3d at pp. 1507-1508.) The State Bar seeks to avoid the impact of these cases by arguing that the arbitration proceeding in which plaintiffs participated was equivalent to the type of administrative adjudication to which the Supreme Court gave preclusive effect in University of Tennessee v. Elliott (1986) 478 U.S. 788 [92 L.Ed.2d 635, 106 S.Ct. 3220]. There, after requesting an administrative hearing to contest his discharge, the employee sued in federal court, making the same claim under various civil rights laws, including Title VII and section 1983. The administrative hearing led to a decision by an administrative law judge that the defendant had not been racially motivated in seeking to discharge the employee, but the administrative law judge ordered the employee transferred rather than discharged. Defendant's vice-president affirmed the ruling in an administrative appeal. The employee did not seek judicial review of that decision. The district court then granted the defendant's motion for summary judgment, ruling that the federal statutes under which plaintiff sued did not afford a right to relitigate the claim. The court of appeals reversed, holding that Congress did not intend federal courts to be bound by unreviewed administrative determinations in actions brought under Title VII. It found the answer less clear under section 1983, but reached the same conclusion. The Supreme Court reversed as to the section 1983 action, reasoning that Congress did not have in mind the possible preclusive effect of an administrative adjudication when the predecessor of section 1983 was enacted and did not intend to create an exception to the general rules of claim preclusion. ( University of Tennessee v. Elliott, supra, 478 U.S. 788, 797 [92 L.Ed.2d 635, 645-646].) The Supreme Court repeated its approval of preclusive effect for administrative adjudications in Astoria Federal S. & L. Assn. v. Solimino, supra, 501 U.S. at pages 107-108 [115 L.Ed.2d at p. 104, 111 S.Ct. at p. 2169]: We have long favored application of the common-law doctrines of collateral estoppel (as to issues) and res judicata (as to claims) to those determinations of administrative bodies that have attained finality. `When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose.' United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422 [16 L.Ed.2d 642, 660-661, 86 S.Ct. 1545] (1966). Such repose is justified on the sound and obvious principle of judicial policy that a losing litigant deserves no rematch after a defeat fairly suffered, in adversarial proceedings, on an issue identical in substance to the one he subsequently seeks to raise. To hold otherwise would, as a general matter, impose unjustifiably upon those who have already shouldered their burdens, and drain the resources of an adjudicatory system with disputes resisting resolution. [Citation.] The principle holds true when a court has resolved an issue, and should do so equally when the issue has been decided by an administrative agency, be it state or federal, see University of Tennessee v. Elliott, 478 U.S. 788, 798 [92 L.Ed.2d 635, 646, 106 S.Ct. 3220] (1986), which acts in a judicial capacity. Neither University of Tennessee v. Elliott, supra, 478 U.S. 788, nor Astoria Federal S. & L. Assn. v. Solimino, supra, 501 U.S. 104, involved compulsory arbitration of a claim prior to filing a section 1983 suit, and neither cast doubt on the rule of McDonald v. West Branch, supra, 466 U.S. 284, 290 [80 L.Ed.2d 302, 308-309]. There the court held that, because Congress intended that section 1983 issues be judicially resolved, giving preclusive effect to an arbitration decision would undermine the efficacy of section 1983 in protecting federal rights. The State Bar's argument depends on its assertion that the arbitration of plaintiffs' claims was equivalent to an administrative adjudication of the type considered by the court in University of Tennessee v. Elliott, supra, 478 U.S. 788. That the arbitration was equivalent to an administrative adjudication is not apparent from the face of the complaint, however. Moreover, the assertion is inconsistent with the State Bar's own rules and regulations, article IA, section 3D through H, which establishes arbitration as the means by which Keller challenges are to be resolved, and with the State Bar's concession that the process is an arbitration modeled after that proposed by the Supreme Court in Hudson, supra, 475 U.S. 292.