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Recent Cases & Decisions in Labor Arbitration

Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

This lesson looks at binding arbitration requirements in collective bargaining agreements. Case law has developed in recent years, but confusion remains. Take a look at when arbitration is required and when a complaint can head to court.

Arbitration Precedence

Yang is studying for his arbitrator exam. During his training course, he learned the intricacies of arbitration. He knows that arbitration is a formal process, typically included in collective bargaining agreements, used to settle disputes and avoid litigation. Yang, as an arbitrator, will be responsible for making an unbiased and binding decision related to the labor disputes he hears.

Binding arbitration decisions are those that Yang will make, and the parties will follow. They also set a precedent for other arbitrators to follow. Five arbitration-related court decisions set the stage for Yang's future arbitration decisions. Let's dive into them one by one.

United Case

United Paperworkers v. Misco, Inc. (1987) involved a union employee, Isaac Cooper. He was arrested on company property for using illegal substances. As a heavy machine operator, he was subject to the company's substance abuse policy. His use of marijuana, while in his car in the company parking lot, lead to a search that resulted in the authorities finding the drug.

Cooper filed a grievance in which he argued that he was not violating a conduct rule, and was therefore improperly terminated. The arbitrator over the case reinstated Cooper, saying there was not sufficient evidence to fire Cooper. Interestingly, the arbitrator didn't include that the marijuana in question was found in Cooper's own car.

The arbitrator's decision was appealed in court. The Court of Appeals then ruled that reinstating Cooper would violate the company's policy. After being appealed to the U.S. Supreme Court, the Court stated that a court had no right to review an arbitrator's binding decision. The United case reassured Yang that when he makes a ruling in a binding arbitration, it will stick. But, this was not that simple as other U.S. Supreme Court cases took a different view on the subject.

Alexander Case

Alexander v. Gardner-Denver Company (1974) resulted in a ruling by the U.S. Supreme Court. Harrell Alexander, Sr., was an employee of Gardner-Denver Company. He was employed to do maintenance. After being placed in a drill operator position where he was a trainee, he was terminated. Alexander, an African-American, filed a grievance under the union contract citing racial discrimination. Management stated that he produced too many bad parts.

The parties went to binding arbitration. While waiting for arbitration to begin, Alexander filed a complaint with the state civil rights agency, who sent the complaint on to the Equal Employment Opportunity Commission (EEOC). The arbitrator failed to address the racial discrimination claim but ruled that Alexander was fired for just cause. The EEOC issued Alexander a right to sue letter, and he proceeded to District Court with a racial discrimination claim under Title VII of the Civil Rights Act of 1964.

The court dismissed the action and stated that the arbitrator had already ruled on the complaint. Therefore, Alexander was bound by the decision. The case was appealed to the U.S. Supreme Court, which ruled that an arbitrator rules on contractual issues. Alexander, the Court held, also had the right to seek a ruling on the Title VII complaint aside from arbitration. For Yang, this was a case that illustrated that statutory rights couldn't be given away during collective bargaining.

Gilmer Case

In Gilmer v. Interstate/Johnson Lane Corp. (1991), Gilmer had to register with the New York Stock Exchange as a condition of employment. In the registration, Gilmer signed off on binding arbitration for any employment disputes. At age 62 Gilmer was fired. As a result, he skipped arbitration and filed suit, citing discrimination under the Age Discrimination in Employment Act (ADEA).

The company requested that the case be dismissed. The court ruled, based on the Alexander case, that Gilmer had a right to have his ADEA case heard regardless of the requirement that he enter into binding arbitration. The case was appealed to the U.S. Supreme Court, and the Court held that the ADEA claim needed to be heard in arbitration, not a court.

This case, in Yang's opinion, illustrated that he should be familiar with federal laws dealing with discrimination, as they can be heard in arbitration. Yang saw this case as a direct contradiction to the Alexander case mentioned earlier.

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