Generally speaking, arbitration is a matter of contract, and arbitration agreements must be enforced according to their terms. The Ninth Circuit recently issued a caveat, however. In In re Wal-Mart Wage & Hour Employment Practices Litigation, No. 11-17718 (9th Cir. Dec. 17, 2013), an issue of first impression, the Ninth Circuit held that a non-appealability clause in an arbitration agreement that eliminates all federal court review of arbitration awards, including review under § 10 of the Federal Arbitration Act, is not enforceable. Federal court review of arbitration awards is already limited to the grounds enumerated in the FAA and to very limited circumstances in which an arbitrator manifestly disregards the law. Allowing parties to contractually eliminate all judicial review of arbitration awards, the court stated, would disregard the text of the FAA and take away the assurance of a minimum level of due process for the parties. This case shows that, while courts do strongly favor enforcing arbitration agreements according to their terms, there are still limits on the terms to which parties can agree.
By Bill Wright
The Railway Labor Act (“RLA”), applicable to railroads and certain other transportation systems, provides for resolution of grievances by special adjustment boards. Dissatisfied parties may appeal the decisions of an adjustment board to court, but only for a limited set of reasons that include “fraud or corruption” by a member of the Board. We have a recent example of what might constitute “fraud or corruption.” In United Transport Union v. BNSF Ry. Co., No. 11-35714 (9th Cir. March 13, 2013), the Ninth Circuit Court of Appeals found the following allegations are enough – if the Union can prove them: BNSF discharged an employee for failing an alcohol test; his second failure in 10 years. The grievance over the discharge went to a special adjustment board. The neutral member of the Board drafted a decision reinstating the employee because there was no evidence about the first violation and, under the employer’s policy, termination would be appropriate only on the second violation. The employer representative on the Board then said to the neutral member: “If you are going to issue these kinds of opinions, you will never work for a Class One railroad again.” The employer representative’s exact words and intended meaning are disputed, but the neutral member recused herself, the issue went to a new panel, and the new panel found enough evidence of the first violation to uphold the discharge. The Union filed suit to overturn the decision for corruption, and the Ninth Circuit agreed the Union had stated a claim. The statement by the employer representative might have threatened the neutral member’s income, and the ultimate decision might have been the result of that threat. More proceedings are necessary to determine whether the allegations are true.
The RLA doesn’t apply to all employers, but the result does: threats won’t end a labor dispute. Also, they are no way to run a railroad.