Opinion ID: 2083424
Heading Depth: 3
Heading Rank: 2

Heading: Due Process and Separation of Powers

Text: Kline makes both due process and separation of powers' arguments in support of his claim that section 176.1812 could not preclude a second appellate review by this court. We have said that due process requires the right of appeal from or review of a decision regarded by a litigant as unjust, Hunter v. Zenith Dredge Co., 220 Minn. 318, 326, 19 N.W.2d 795, 799 (1945), and separation of powers makes it necessary for the legislature to provide the right to judicial review of compensation determinations made by executive branch judges, Breimhorst v. Beckman, 227 Minn. 409, 433, 35 N.W.2d 719, 734 (1949). But these principles do not apply where a party has waived the right to a particular form of judicial review and where the compensation determinations are made by a private arbitrator, not by an executive branch judge.
It is well established that a private party may waive the right of judicial review or a particular form of review. In fact, the situation here strongly parallels that present in Falgren, where we said: Falgren had a choice whether to contest his discharge in a hearing before the school board or before an arbitrator. Falgren chose a hearing before an arbitrator. Thus, we agree with the Board; by choosing to have his discharge heard before an arbitrator, Falgren waived his rights to broader judicial review. Along with whatever benefits Falgren felt his decision to have his termination hearing before an arbitrator offered, he must also accept the drawbacks. 545 N.W.2d at 906. Similarly here, Kline (acting through his union) had a choice to contest his compensation claim before a compensation judge or an arbitrator. The choice of a compensation judge would have provided for broader appellate review by this court on appeal from a decision of the WCCA. But the choice of an arbitrator, by agreeing to adopt the rules of the Fund, means that only one direct appellate review will be provided, by the WCCA, and the only judicial review available is the narrow review of a motion to vacate the award under the MUAA. See Minn.Stat. ?572.19, subd. 1. By opting for arbitration, Kline retained the narrow judicial review available under the MUAA but waived the broader judicial review that would otherwise have been available under the workers' compensation laws.
In addition, the creation of a private ADR system does not present due process or separation of powers concerns because it does not involve state action. Two Florida decisions directly addressed the state action issue in connection with constitutional challenges to similar workers' compensation reform. In Gassner v. Bechtel Constr., 702 So.2d 548 (Fla.Dist.Ct.App.1997), the court affirmed the decision of the compensation judge that she lacked jurisdiction because Gassner's exclusive remedy was to follow the ADR procedures adopted in the collective bargaining agreement. The court stated: Finally, appellant contends that section 440.211, Florida Statutes (1995), is unconstitutional to the extent it allows the collective bargaining agreement to establish an alternative dispute resolution system that diminishes procedural protections chapter 440 would otherwise afford a claimant. A great many such diminutions are alleged, including some that pertain to resolving disputes concerning attorney's fees. Denial of equal protection, deprivation of due process and of the right to counsel, in violation of both state and federal constitutions, are all claimed. Mr. Gassner also argues that the failure of the judge of compensation claims to assume jurisdiction denied him access to court, in violation of article I, section 21 of the Florida Constitution. All of these arguments overlook the fact that the collective bargaining agreement between Bechtel and Mr. Gassner's union does not constitute state action. See generally Kintzele v. J.B. & Sons, Inc., 658 So.2d 130, 132 (Fla. 1st DCA 1995) (The parties themselves confer jurisdiction in arbitration proceedings by the agreements they make.).     As a matter of constitutional law, permitting private parties to establish dispute resolution procedures by contract violates no provision of the Florida Constitution, and is not the sort of state action to which the Fourteenth Amendment speaks. Id. at 554. Similarly, in Ariston v. Allied Bldg. Crafts, 825 So.2d 435, 437-38 (Fla.Dist.Ct.App.2002), the court affirmed the dismissal of a petition for compensation benefits because the collective bargaining agreement required the claimant to use the ADR procedures. In rejecting the claimant's argument that his union could not waive his right to a judicial forum, the court said that any principle against waiver by the union did not apply because the legislature both established the workers' compensation system and enacted section 440.211, expressly approving the development by employers and unions of alternative systems of resolving compensation disputes. [The claimant's] union did not bargain away his inviolable right to utilize chapter 440; the legislature declared that it is not an inviolable right, and instead permitted the [collective bargaining agreement] mechanism to provide the only avenue for recovery of compensation benefits. Id. at 437.
The majority suggests that state action may be found because of society's interest in the workers' compensation system. To the extent that the workers' compensation system is the product of social legislation, it should be enough to say that, under separation of powers, the social aspects of that system are best addressed by the legislature, not by the court, and the legislature did address those social aspects when it enacted section 176.1812. The court should not substitute its view of the social utility of the use of private ADR systems for workers' compensation claims for the view already expressed by the legislature when it authorized those systems in section 176.1812. Moreover, in a case relied upon by the majority, the United States Supreme Court determined that there was no conflict between the use of arbitration and the social policies that underlie a statutory claim: As [appellant] contends, the [Age Discrimination in Employment Act] is designed not only to address individual grievances, but also to further important social policies. We do not perceive any inherent inconsistency between those policies, however, and enforcing agreements to arbitrate age discrimination claims. It is true that arbitration focuses on specific disputes between the parties involved. The same can be said, however, of judicial resolution of claims. Both of these dispute resolution mechanisms nevertheless also can further broader social purposes. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 27, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (internal citations omitted).
The majority suggests that [t]he statutory authorization for private ADRs essentially delegates the quasi-judicial function of the agency to private parties, making actions of those parties in that capacity state action. But the cases relied upon by the majority do not support that proposition. In both Edmonson v. Leesville Concrete Co., Inc., 500 U.S. 614, 625, 111 S.Ct. 2077, 114 L.Ed.2d 660 (1991) and Smith v. Allwright, 321 U.S. 649, 660, 64 S.Ct. 757, 88 L.Ed. 987 (1944), the government had delegated to a private party the power to perform an essential governmental function. Edmonson dealt with the use of peremptory challenges to assist in the selection of a jury in a civil trial. 500 U.S. at 623-24, 111 S.Ct. 2077. The Court noted that a jury is a quintessential governmental body, having no attributes of a private actor. Id. at 624, 111 S.Ct. 2077. Smith dealt with the use of primary elections to select nominees for the general election. 321 U.S. at 652-53, 64 S.Ct. 757. The Court observed that [p]rimary elections are conducted by the [political] party under state statutory authority and extensive state regulation, which makes the political party an agency of the state in so far as it determines the participants in a primary election. 321 U.S. at 663, 64 S.Ct. 757. In contrast, section 176.1812 does not authorize private parties to perform an essential governmental function. Instead, it authorizes private parties to opt out of the governmental process. This, of course, is why arbitration is called alternative dispute resolution  it does not use the governmental system (in this case, the executive branch quasi-judicial system) but provides a private alternative. The resolution of a private dispute is a role that the government will perform when the parties have not agreed otherwise, but it is not an essential governmental function that should be imposed on parties that have agreed to an alternative mechanism. To the contrary, this court has actively encouraged the use of ADR mechanisms and they are widely used to resolve private disputes of all kinds.
The majority suggests that state action exists because the compensation claim being arbitrated is a statutory claim. But this ignores the clear statement in Edmonson that the private use of state-sanctioned private remedies does not rise, by itself, to the level of state action. 500 U.S. at 622, 111 S.Ct. 2077. And the primary authority relied upon by the majority for this proposition actually supports the opposite conclusion. In Gilmer, the Court held that a statutory claim under the Age Discrimination in Employment Act may be the subject of an arbitration agreement. 500 U.S. at 35, 111 S.Ct. 1647. The Court stated, Although all statutory claims may not be appropriate for arbitration, `[h]aving made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory right at issue.' 500 U.S. at 26, 111 S.Ct. 1647 quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). The Court went on to say that the burden was on the party opposing arbitration to show that Congress intended to preclude a waiver of a judicial forum for ADEA claims. Id. The Court held that, although the ADEA did not expressly authorize arbitration, there was nothing in the text or the legislative history that precluded it and arbitration was not inconsistent with the purposes of the Act. Id. at 26-27, 111 S.Ct. 1647. [6] Here, we do not need to speculate about whether the legislature intended to allow the parties to waive a judicial forum because section 176.1812 says so expressly.
Finally, the majority notes that [t]he administrative procedures created to implement workers' compensation laws survived constitutional separation of powers concerns, in part, because the agency's awards and determinations were subject to review by this court. ( citing Breimhorst, 227 Minn. at 433, 35 N.W.2d at 734 ). While this proposition is correct in the abstract, it has no application here because it only applies to legislative action that precludes judicial review of decisions of an executive agency. It does not apply to the agreements of private parties that waive the right to a broader form of judicial review of decisions made by a private arbitrator. The legislative authorization for private parties to adopt an ADR system does not vest quasi-judicial powers in any executive agency. Instead, it allows private parties to avoid the quasi-judicial powers of the agency, submit their disputes to an ADR process and waive the right they would otherwise have to obtain a broader form of judicial review of any award. Moreover, the legislative authorization is purely permissive. Workers and their unions are not required to adopt any ADR system, but can continue to use the formal claims process. Thus, the authorization and approval of private agreements that create ADR systems does not constitute state action, and does not provide a basis for a separation of powers' claim. Further, as noted earlier, judicial review of the arbitrator's award is available under the MUAA. Section 176.1812 does not preclude that judicial review; it only authorizes the parties to agree to waive a second form of judicial review by limiting direct appellate review to the WCCA.