Arbitration decisions: Are They in Compliance With The JUST CAUSE STANDARD - or is the Penalty Determined Under the JUST 'CAUSE Someone Dislikes You Standard?

If you are working in disciplinary hearings or 3020-a arbitration, or you want to appeal an arbitrator's decision, you should use JUST CAUSE in your argument.

Betsy Combier

 

                                                   

 JUST CAUSE FOR DISCIPLINE

Did You Know as a union member your employer can not discipline you or fire you without “Just Cause”?

The U.S. labor movement has secured a number of important rights for unionized workers. Among such rights, just cause provides important protections against arbitrary or unfair termination and other forms of inappropriate workplace discipline. Just cause has become a common standard in labor arbitration, and is included in labor union contracts as a form of job security. Typically, an employer must prove just cause before an arbitrator to sustain an employee's termination, suspension, or other discipline. Usually, the employer has the burden of proof in discharge cases or if the employee is in the wrong.

Employees are expected to meet performance standards and behave appropriately in the workplace. Disciplinary or corrective action taken by the employer is supposed to be a process of communicating with the employee to improve unacceptable behavior or performance. There is a set of guidelines, called the “Seven Tests of Just Cause” that employers are expected to follow when imposing discipline; that Unions need to assure have been applied to their members; and that arbitrators use as a basis to form their decisions.

A LITTLE HISTORY:

For decades, professional arbitrators struggled to reach consistent decisions in discipline cases, because they recognized that inconsistent results produced chaos in both the arbitration process and the work place. Finally, noted arbitrator Carroll R. Daugherty decided to take the bull by the horns by combining the many concepts employed by arbitrators in discipline cases into a single theory which he called “a sort of ‘common law definition” of just cause. It set out to be applied to the facts of any one case which we now refer to as the seven tests of just cause.

The award by Arbitrator Daugherty which is generally recognized as the first decision to formally set out all of the seven tests of just cause was in the matter of Enterprise Wire Co. and Enterprise Independent Union and was issued March 28,1966 (46 LA 359).

You can read Daugherty’s full Arbitration Decision at  https://www.hawaii.edu/uhwo/clear/home/EnterpriseWire.html                                            

This was a discharge case involving absenteeism and unsatisfactory work. Unfortunately, in this case, Arbitrator Daugherty ruled in favor of the employer; the union lost the case and the employee was fired. This historic case set the rules for Just Cause and is still being used today by employers, and arbitrators.

DID THE EMPLOYER HAVE JUST CAUSE?

Using the Seven Tests

Here are the "Seven Tests" as to whether the boss has used "just cause" in discipline and discharge cases.

Issues

* Our main contractual weapon in discipline and discharge cases is usually the requirement that the boss must have "just cause" (or "fair cause" or "proper cause") to take action against an employee. Even if these words are missing from the contract, many arbitrators use this standard, anyway.

* But, what is "just cause"? Simply put: it means the employer must have a reason (he or she must have "cause") for imposing discipline and the reason must be fair ("just").

* It is commonly accepted that there are seven tests as to whether the boss has used "just cause" in handing out discipline.

One of the main reasons workers join unions is to gain protection against unfair and unjust discipline that employers hand out. Stewards must be ready to handle all sorts of discipline cases, from warnings to suspensions to firings. Stewards must be ready to deal with situations of gross discrimination by the boss on who gets disciplined, to dealing with union members who sometimes seem to go out of their way to get themselves fired.

Our main contractual weapon is often times summed up in one short sentence, "Employees shall be disciplined or discharged only for just cause". In some contracts the words used are "proper cause" or "fair cause". The importance of a sentence like this is that it binds the employer to imposing discipline not just for any reason (cause) but the reason has to be a "just" reason. Many arbitrators have gone so far as to hold all employers to a "just cause" standard, whether the contract uses the words or not.

What is a "just cause" standard? It is commonly accepted that there are seven tests as to whether a boss has used "just cause" in handing out discipline. The Bureau of National Affairs lists them as follows:

1. NOTICE – Was the employee adequately warned of the consequences of his conduct?

Prior to imposition of discipline, employees must have notice of rules and expectations. The warning may be given orally or in printed form. An exception may be made for certain conduct, such as insubordination, coming to work drunk, drinking on the job, or stealing employer property, that is so serious that the employee is expected to know it will be punishable.

Example: If an employee is told to stop using vulgar language and told that if he continues he will be disciplined, that may be adequate warning. However if a boss comes up to an employee and says "I'm tired of your swearing, cut it out", and then the next day fires the employee for swearing again, that may not be adequate warning.

2. REASONABLE RULES OR ORDERS – Was the employer's rule or order reasonably related to efficient and safe operations?

Was the employer’s rule reasonably related to (a) the orderly, efficient, and safe operation of the employer’s business, and (b) the performance that the employer should properly expect of the employee?

Example: A boss makes a rule that all employees must wear red tee shirts and they must be tucked in so they don't get caught in machinery. An employee is fired for wearing a blue tee shirt that was tucked in. Making a rule that tee shirts must be tucked in so they won't get caught in machinery may be reasonable and related to safety, but demanding the tee shirt be red isn't related to safety or efficiency.

3. INVESTIGATION – Did management investigate before administering the discipline?

Did the employer, before administering the discipline to an employee, make an effort to discover whether the employee did in fact violate or disobey a rule of management? The investigation normally should be made before the decision to discipline is made. Where immediate action is required, however, the best course is to suspend the employee pending investigation with the understanding that he will be restored to his job and paid for time lost if he is found not guilty.

Example: The boss fires a worker for stealing and then demands evidence from the union that the worker isn't guilty. At the grievance meeting the boss admits he never investigated the incident, just took another employee's word. This probably wouldn't hold up. If the union has facts to prove the employee's innocence they should be presented to the boss, even though he failed to properly investigate the case.

4. FAIR INVESTIGATION - Was the investigation fair and objective?

Example: If an incident happened does the employer interview everyone present or only management people who were present. If the employer refuses to interview nonmanagement workers then the investigation may not be fair.

5. PROOF - Did the investigation produce substantial evidence or proof of guilt?

It is not required that the evidence be preponderant, conclusive, or "beyond reasonable doubt," except where the alleged misconduct is of such a criminal or reprehensible nature as to stigmatize the employee and seriously impair his chances for future employment.

Example: Here it is obvious that workers have fewer rights inside the workplace than they would have in civil court, but still the boss must have real evidence, not guesses. Again the boss cannot just try to make a worker prove his or her innocence, without presenting proof of guilt.

6. EQUAL TREATMENT - Were the rules, orders, and penalties applied evenhandedly and without discrimination?

If enforcement has been lax in the past, management cannot suddenly reverse its course and begin to crack down without first warning employees of its intent.

Example: This is the most common form of discrimination. An employer decides to suspend Mary for taking too long at lunch, but lets the employees who eat lunch with a supervisor take extra time every day. This would not hold up. However, if the employer tells everyone that starting on Monday employees will be disciplined for taking too long at lunch and on Tuesday Mary comes back late and everyone else has been on time, she may be disciplined.

7. PENALTY - Was the penalty reasonably related to the seriousness of the offense and the past record?

Was the degree of discipline administered by the employer in a particular case reasonably related to (a) the seriousness of the employee’s proven offense, and (b) the record of the employee in his or her service with the employer?

If employee A's past record is significantly better than that of employee B, the employer properly may give employee A lighter punishment than employee B for the same offense. The degree of discipline, is important because arbitrators want to ensure that the "punishment fits the crime." An employer's use of progressive discipline often gives the employer an advantage in arbitration.

Example: The classic example is two employees get in an argument and shove each other. One has 25 years service with a clean record. The other has 3 years service with lots of warnings and discipline. Based upon the workers seniority and records, the employer may give the older worker less punishment than the other worker.

---

Tips for Handling Discipline & Discharge Cases

Here are some basic tips for stewards handling discipline and discharge cases:

* Use the "seven tests" as an outline. Did the employer meet the seven tests? Remember that just because an employer messes up on one of the seven tests, this doesn't mean we automatically win, but proving they screwed up helps a lot.
* Make sure that an employee's Weingarten rights aren't or weren't violated during the employer's investigation.

* Try to stop the employer from suspending or firing a worker. Try to get a cooling off period if necessary. The case becomes harder once a worker is out the door, now we not only have to fight about what happened but over back pay, etc.
* Ask for all the employers’ notes and records they used to make a decision. Get any notes or records a foreman or supervisor might keep, even informal records. The union has a right to them. On the other hand the employer has no right to the notes or records that the union makes when investigating a case.
* Do a thorough investigation of the case. DON'T take the employers word on anything.
* In a grievance meeting make the employer prove their case first. Make them present all the facts and don't assume anything. Don't let the boss start the meeting by saying to the union, “OK tell me why I shouldn't fire Joe". Make the boss justify firing Joe.
* There are two parts to every discipline case. Did the employee violate a known rule and what should the punishment be? Sometimes we lose the first part but then we have to make sure the punishment fits the offense.
* If the employer refuses to back down from a written warning and the case doesn't merit arbitration make sure the employer receives from the union a written statement disputing the facts and the discipline. Have this letter also put into the employees personnel file.

---

In closing, we should all be aware of the JUST CAUSE principles; and we all need to know what PROGRESSIVE DISCIPLINE looks like.

Within any workers career they will face at least one episode that could be discipline. Has your supervisor discussed a matter with you that he or she has asked you to change? It may sound like a friendly suggestion; and it might be. But it also is Step one of Progressive Discipline.

---

---

SOURCES:
http://en.wikipedia.org/wiki/Just_cause"Categories: Employment
http://research.uiowa.edu/pimgr/?get=7steps
http://www.umass.edu/usa/justcause.htm
http://www.ueunion.org/stwd_jstcause.html (includes cartoon)
http://das.hre.iowa.gov/html_documents/ms_manual/11-10.htm
http://clear.uhwo.hawaii.edu/EnterpriseWire.html

What Not To Do At Arbitration

Top Ten Mistakes Lawyers Make In Arbitration And Tips on How to Avoid Them!

AUGUST 31, 2011 BY PHILCUTLER

LINK

By Phil Cutler

Cutler Nylander & Hayton PS

1191 Second Avenue

Seattle, WA  98101

philcutler@cnhlaw.com

206-340-4600

Philip E. Cutler © 2011

 For over 20 years I have presided over or participated as a panelist in hundreds of arbitrations.  Those experiences have shown me the good, the bad and the ugly.  Quite frankly, there are many more seriously egregious mistakes I have seen lawyers make; it was difficult to pare this list down to 10.

 #10 – Play Games:  Engage in Cheap Games and Discovery Abuse; Continue Gamesmanship During the Hearing

Arbitration is no more a macho gladiator contest than litigation, though some lawyers (and their clients too, unfortunately) seem to believe that gamesmanship – hardball tactics, obfuscation and delay – is the way to win cases.  Though they are wrong, they nonetheless:

• refuse to stipulate to anything
• object to practically everything, especially any proposal made by opposing counsel
• refuse to extend professional courtesies to opposing counsel
• insist on unbridled discovery rather then thoughtfully analyzing their client’s and the opposing party’s legitimate discovery needs and putting together a discovery plan that largely meets everyone’s needs
• schedule depositions unilaterally and/or refuse to adjust the schedule to accommodate witness’s or opposing counsel’s legitimate needs
• lard responses to written discovery with lengthy and generally worthless (and usually unfounded) boilerplate objections
• unreasonably delay providing documents or information
• suddenly “discover” key exhibits during the hearing
• reactively object to nearly all exhibits offered at the hearing by the other side
• whether at depositions or the hearing, lodge objections to examination questionsthat are largely specious, generally for the sole purpose of interrupting the flow of the case
• are coy about scheduling witnesses’ hearing testimony
• refuse to cooperate in any respect

 These lawyers and clients seem to believe that the arbitrator is impressed by these tactics or awards points based on counsel’s cleverness in obfuscating matters, delaying resolution or raising the cost of the case.  They don’t.  Indeed, tactics such as these are seen for what they are:  simple gamesmanship.  Parties and their lawyers who engage in them lose credibility with the only one who counts:  the arbitrator.

Avoid games-playing like the plague.  Like litigation, arbitration is an adversarial process; that, however, does not mean that basic professionalism and civility are ignored in favor of chest-thumping and uncooperativeness.  Counsel should pick her fights with care;  save arguments for those matters that are really important; try and resolve all other matters cooperatively.

Remember that discovery in arbitration is substantially less broad than it is in litigation; tailor your discovery, and suggest a mutual discovery plan, that legitimately addresses the needs of the parties and the case; the arbitrator is unlikely to be receptive to a party’s insistence on turning over every rock.[1]  Avoid bringing numerous discovery disputes to the arbitrator for resolution; arbitrators don’t like having to resolve such disputes any more than judges do.

#9 – Display Anger, Animosity and Rudeness:  Personalize Everything; Engage in Ad Hominem Attacks

You have seen it before, the lawyer who:

• refers to the opposing lawyer or witness (or even the arbitrator!) disrespectfully

• sneers, rolls his eyes or raises his eyebrows at arguments made by opposing counsel or a witness’s testimony

• lards briefs or oral arguments with purple prose

• encourages or allows her client to make sotto voce comments about testimony, exhibits or case developments

Avoid personal attacks.  Emotions can run high even in arbitration, but your clients have a dispute, which you have been hired to help them resolve – not to fan the flames.  You can be a zealous advocate without stooping to the level of a street-fighter.  Don’t characterize the opposing side’s arguments (or a witness’s testimony) as “patently ridiculous” (or use similar purple prose) in your briefs, examination or oral arguments.  Engaging in such conduct merely highlights for the arbitrator your (or your client’s) lack of professionalism, civility and faith in the merits of your client’s cause.  The arbitrator is looking for objectively supportable facts and legal authority to help her decide the case.  This sort of conduct detracts from the merits of your case and distracts the arbitrator from doing her job.

#8 – Overuse or Misuse Technology:  Use Fancy but Unnecessary Technological or Demonstrative Aids; Fail to Know how to use Them

 Technology is a wonderful teaching and learning tool.  But using power-points or electronic displays for everything is generally unhelpful and can be distracting.  Technology is especially unhelpful (and distracting) if it doesn’t work.  Moreover, unless you print out whatever you display electronically, the arbitrator won’t have a record of your “techie” presentation available to refer back to after the hearing.

In deciding what technology to use, and how, remember that the point of the hearing is to tell your side’s story to a particular audience:  the arbitrator.  Ask yourself if your proposed tech aid facilitates the telling of that story or gets in the way.  You will have presented exhibits in paper form (commonly in a tabbed ring-binder), which both the arbitrator and the witness will have available during the hearing.  Putting exhibits up on a screen (generally with ambient lighting making it difficult to read and follow along; extinguishing the lights makes note-taking difficult or impossible) is frequently unhelpful and often counter productive.  If there is a key phrase or section in an exhibit that you wish to highlight, have a large and readable blow-up made; it will be easier for the arbitrator and witness to read and assimilate.  Most arbitrators appreciate counsel highlighting (a yellow marker does the job nicely) key portions of exhibits in their binder.

The same holds true for squibs from deposition transcripts.  If you are using technology, be sure you practice beforehand so that your presentation is flawless.  If you are using a video squib (from a deposition, for instance), limit use to the really important parts and cue up any squibs so that the presentation is effective.  If you intend to use a power-point presentation during your closing argument, be sure to print off a copy and give it to the arbitrator (and opposing counsel, of course) before the argument.

#7 – Waste Opportunities to Persuade the Arbitrator:  Assume the Arbitrator Shares Your Knowledge of the Case; Fail to Analyze, Distill and Organize Your Case; File Long and Unpersuasive Briefs

By the time the hearing rolls around, you will have lived with your case – the facts and the law – for several months.  The arbitrator may be a quick study, but she doesn’t have the same knowledge base as you do.  Your task at the hearing is to bring the arbitrator along – don’t waste the opportunity to educate her.  Your hearing brief ought to highlight the critical facts that will be adduced at the hearing, put those facts into context so their importance is obvious, and apply the law to the facts.  Make sure the arbitrator knows who the main players (and witnesses) are, and why their testimony is important; cover the elements of your claim or defense.  If a timeline is important, consider preparing a chronology.

Briefs should be focused and as short as possible.  Even if the arbitrator doesn’t place a page-limit on briefs, use local federal or state brief limits as guidelines.  If your hearing brief is longer than 30 pages, try again.  Remember that a reply brief is designed to reply to an argument that your opponent has made in opposition (and which you may not have addressed to your satisfaction in your opening brief); don’t simply repeat all the arguments made in your opening brief.

#6 – Ask Inappropriate Questions; Fail to Pick up on an Opportunity to Deal   With Something the Arbitrator views as Important; Ignore a Witness’s Non-Responsive Answer:  Ask Questions That are not Really Questions or ask Overly Legalistic Questions of a Lay Witness; Rebuff Questions from the Arbitrator

Long, wandering “questions” are to be avoided, as are questions asking for a legal conclusion – from either a lay or expert witness.  Strive for short, crisp questions. Write your questions out ahead of time or practice them.  Be sure there is a question mark at the end.  The power of the witness’s answer depends on the clarity of the question it responds to; if the witness is confused, the arbitrator will likely be confused as well.

Ask questions of witnesses; don’t testify yourself.  The arbitrator is interested in the witness’s testimony, not yours.

Listen to the witness’s response: the arbitrator will hear what the witness says, not what you expect him to say.  If the witness fails to answer the question you asked, repeat it and ask for a response.  A motion to strike as non-responsive will highlight for the arbitrator that the witness may be evasive or not paying attention.

Welcome questions from the arbitrator; if she asks questions, assume that she really is interested in the answer.  Don’t put the arbitrator off by saying, “I’ll come back to that.”  In all likelihood you won’t.  Even if you do, you will have missed an opportunity to respond timely to something the arbitrator wanted more information about.

#5 – Assume the Evidentiary Rules in Arbitration are the Same as Those in Court:  Fail to Take the Time to Understand the Rules of Evidence; Make Numerous and Ineffective Evidentiary Objections

While “not everything goes” in arbitration, arbitration hearings are generally unfettered by the evidentiary rules applicable to court proceedings.  It behooves counsel to know what rules there are and to act accordingly.

Most arbitration providers have rules similar to Rule R-31, AAA Commercial Rules, which states the general evidentiary rule applicable in arbitration:  “Conformity to legal rules of evidence shall not be necessary”  and “The arbitrator is empowered to decide the admissibility, relevance and materiality of evidence that is offered.”  To the same effect is Section 15 of the Revised Uniform Arbitration Act.[2]

Most arbitrators will allow leading questions on preliminary matters or matters which are not critical to disposition.  Avoid, however, leading your own client: doing so telegraphs to the arbitrator that your client is unable to testify . . . so you have to do it for him.

Lay an appropriate foundation for key evidence, but don’t overdo it.  Faced with a “lack of foundation” objection, many arbitrators will overrule it and tell you that you may demonstrate the unreliability (or irrelevance) of the evidence on cross.  Pick up on that and heed her advice.  The case will move along more quickly and, assuming you ask crisp, focused questions on cross, the arbitrator will get the point that your opponent’s evidence is to be ignored or not to be accorded much weight.

While arbitrators will not generally accept 3^rd or 4^th hand hearsay, they will frequently allow hearsay if the evidence is of the sort that a reasonable and prudent business-person would rely on, reserving for herself a decision on the weight that such evidence should be accorded.  Just because a hearsay objection could (and perhaps should) be made at trial, does not mean that objection should be made at the arbitration hearing.[3]  Making numerous and repetitive objections, especially hearsay objections and sweeping admissibility objections to exhibits on any ground, at the hearing is most often counterproductive and serves only to diminish counsel’s effectiveness in the eyes of the arbitrator.  Wise counsel will limit her objections to those which are recognized in almost every context, such as those based on attorney-client privilege, or which are not only critical to the case but also likely to be sustained (e.g., questions about settlement or mediation).

At trial, counsel would hardly ever get away with introducing a declaration of affidavit from a witness.  The same is not true in arbitration.  See, e.g., Rule R-32, AAA Commercial Rules, which permits such evidence over objection with the caveat that the arbitrator will give it such weight as she deems it entitled to.  Your chances of getting the arbitrator to give your witness’s declaration or affidavit substantial weight will be improved if you make the witness available for cross-examination either by telephone or video conference.

#4 – Misuse Cross-Examination of Witnesses:  Try and use Cross to Prove Your Case in Chief; Fail to Plan Cross Before the Hearing

Any student of trial advocacy knows that cross-examination is one of the most powerful tools available to counsel.  Nonetheless, lawyers continue to:

• ask open-ended questions on cross, giving the witness an(other) opportunity to tell “his” side of the story

• ask questions to which the lawyer does not know the answer (a bad idea unless the lawyer doesn’t care what the answer is)

• try and use cross to prove her case-in-chief

• spend time on cross laboriously challenging every jot and tittle of the witness’s direct examination, especially as to matters that are not important

 Generally, the most that counsel can hope for from a witness on cross-examination is that some in-roads can be made debunking a key point of the other side’s case.  If you have prepared your case well, you will know what points you can get from the witness on cross.  Make a short list and get to it.  Except in the unusual case, resist the temptation to grill the witness for hours on everything he or she said on direct.  While there is truth to the “death by a thousand cuts” maxim, it is rare that such a strategy yields significant results at a hearing.

#3 – Continue Blithely on, Ignoring What Common Sense Tells (or Should Tell) You: Fail to Know When to Stop; Treat the Arbitrator as an Unsophisticated Rube

The arbitration hearing should not be an endurance contest.  Counsel’s task is to present sufficient evidence on key factual points to sustain her client’s burden of proof and provide a foundation for closing argument; do so and then STOP!  There is a difference between “corroborating” evidence and “cumulative” evidence.  Recognize it.

Know your arbitrator’s professional background and work history; know the elements of proof needed.  Prepare your case accordingly.  While your arbitrator may not be an expert on your client’s industry or the particular legal issues your case presents, he is an intelligent individual, who frequently has “tried” cases before, if not as an arbitrator then as counsel.  If the arbitrator tells you that “I got it”, believe him.  Burdening him with hours more testimony on the same subject will not help him rule in your favor; it will likely antagonize and frustrate him.

#2 – Make it Difficult for the Arbitrator to Rule in Your Client’s Favor:  Fail to Organize Your Case and get Your Client’s Story Across

One would think that counsel would do everything possible to help the arbitrator rule in the client’s favor.  It’s amazing how many times counsel does not do so.  In arbitration, your only audience should be the arbitrator.  Make it easy for the arbitrator to understand your case and follow along.

The arbitrator can only rule in your client’s favor if he understands the facts and why they are important.  In order for the arbitrator to “get it” he needs to be told clearly who did what to whom (or didn’t do something) and how that plays with all the other facts that are important.  Begin to do that in your arbitration brief (if you haven’t had an opportunity before then to give the arbitrator a taste of what the case is about).

Similarly, the arbitrator needs to understand the key legal principles that undergird your case.  While some believe that arbitrators try and do equity (some say, by “splitting the baby”), in my experience arbitrators do their best to apply applicable law to proven facts and let the chips fall where they may.  To that end, counsel needs to clearly and cogently – and persuasively – demonstrate to the arbitrator what the law is, and how the law compels an award in your client’s favor.  Do not assume the arbitrator knows what the law is.

Every case has a “story” to tell.  That story should be simple, interesting and based on fact – not fiction.  Commonly, exhibits are an important part of that story.  Prepare your witnesses to tell the story in their words; let them tell it.  Make sure you integrate exhibits with testimony.  If, as is most often the case, chronology is important, prepare a chronology or time-line; find a way to use it as an exhibit, even a demonstrative one.

Organize the exhibits chronologically, or by issue; eliminate duplicate copies of exhibits (there should be only one exhibit that is the contract at issue); number exhibits so that there is only one “Exhibit 1” (you want the arbitrator to be able to easily find, track and follow exhibits and witnesses’ testimony).  Tell the arbitrator how you’ve organized your case.

Put all exhibits in one or more tabbed ring-binders.  Be sure the arbitrator has her own set of exhibit binders; all counsel and the witness should also have their own set: don’t expect to look over the arbitrator’s shoulder.  Don’t use binders with more than a 3-inch spine; when filled with paper, large-spine binders are too heavy and unwieldy.  Put a few extra tabs in the arbitrator’s binder to accommodate the inevitable “late” exhibits.  When bringing additional exhibits to the hearing for insertion in the binders, make sure the exhibits are hole-punched so the arbitrator can easily add them.  Consider using a separate binder of “core” exhibits that will be referred to frequently during the hearing.

#1 – Fail to Tell the Arbitrator Exactly What Your Client Wants:  Don’t Tell her, Keep it a Secret; Hope the Arbitrator “gets it” by Osmosis

Well before the hearing, develop a theory of the case and be sure your story is laid out by your witnesses (and the answers to your focused cross-examination) and exhibits. The arbitrator will never have the breadth of knowledge that you do – and probably doesn’t want or need to.  She does need a clear roadmap, however.  Give her one.

Use your arbitration brief to tell the arbitrator exactly what relief your client wants, and why; repeat it in your opening statement (“the evidence will show that . . . and that an award of . . . should be entered”) and again in closing argument.  Give the arbitrator a draft award laying out the relief your client wants her to award.  If you want injunctive relief, say so and tell the arbitrator what conduct should be prohibited and for how long; give her the legal basis for such an award.  If you’re seeking pre-award interest, specify the date and amount on which such interest should begin to run and the interest rate that should be used – and why.

Be careful what you ask for, you may get it.  In Washington, attorneys’ fees are awardable only where specifically provided for by contract or statute.  However, if your arbitration is administered under the AAA’s Commercial Rules, be aware of Rule R-43(d):  “The award . . . may include . . . an award of attorneys’ fees if all parties have requested such an award or it is authorized by law or their arbitration agreement.”  Asking for attorneys’ fees only because your opponent has requested such relief (and there is no statute or contract authorizing it) can expose your client to an award for substantial fees even if they would not otherwise be available.

Phil Cutler

August 2011

---

[1]     The rules of most arbitration provider organizations give the arbitrator substantial power to manage and deal with discovery.  See, e.g., Rules R-21, 30 and 31, AAA Commercial Arbitration Rules, and Rule L-4, AAA Optional Rules for Large Complex Cases.  To the same expect, but more explicitly, is Section 17 of the Revised Uniform Arbitration Act (adopted in Washington (see RCW 7.04A.170), as well as in many other states).  Moreover, commercial users of arbitration (and their general counsel), view overbroad discovery in arbitration as a significant, and expensive, negative.  See  Cutler, “Reclaiming the Promise of Arbitration,” KING COUNTY BAR BULLETIN (July 2011), and Protocols  for Expeditious, Cost Effective Commercial Arbitration (Stipanowich, von Kann and Rothman, eds.) (College of Commercial Arbitrators, 2010), available on line at www.thecca.net.  Experienced arbitrators tend to actively manage the discovery process so as to reduce the cost of arbitration and improve its effectiveness and efficiency.

[2]     See RCW 7.04A.150(1).

[3]     A key reason for objections at trial is to preserve one’s record for appeal.  Not only is there commonly no transcript of the arbitration hearing, there is very limited judicial review of an arbitrator’s award.  See 9 U.S.C. §10 (Federal Arbitration Act), Section 23 of the Revised Uniform Arbitration Act and RCW 7.04A.230.

Arbitration Defined

The submission of a dispute to an unbiased third person designated by the parties to the controversy, who agree in advance to comply with the award—a decision to be issued after a hearing at which both parties have an opportunity to be heard.

Arbitration is a well-established and widely used means to end disputes. It is one of several kinds of Alternative Dispute Resolution, which provide parties to a controversy with a choice other than litigation. Unlike litigation, arbitration takes place out of court: the two sides select an impartial third party, known as an arbitrator; agree in advance to comply with the arbitrator's award; and then participate in a hearing at which both sides can present evidence and testimony. The arbitrator's decision is usually final, and courts rarely reexamine it.

Traditionally, labor and commerce were the two largest areas of arbitration. However, since the mid-1970s, the technique has seen great expansion. Some states have mandated arbitration for certain disputes such as auto insurance claims, and court decisions have broadened into areas such as Securities, antitrust, and even employment discrimination. International business issues are also frequently resolved using arbitration.

Arbitration in the United States dates to the eighteenth century. Courts frowned on it, though, until attitudes started to change in 1920 with the passage of the first state arbitration law, in New York. This statute served as a model for other state and federal laws, including, in 1925, the U.S. Arbitration Act, later known as the Federal Arbitration Act (FAA) (9 U.S.C.A. § 1 et seq.). The FAA was intended to give arbitration equal status with litigation, and, in effect, created a body of federal law. After World War II, arbitration grew increasingly important to labor-management relations. Congress helped this growth with passage of the Taft-Hartley Act (29 U.S.C.A. § 141 et seq.) in 1947, and over the next decade, the U.S. Supreme Court firmly cemented arbitration as the favored means for resolving labor issues, by limiting the judiciary's role. In the 1970s, arbitration began expanding into a wide range of issues that eventually included prisoners' rights, medical malpractice, and consumer rights. In 2003, all 50 states had modern arbitration statutes.

Arbitration can be voluntary or required. The traditional model is voluntary, and closely linked to contract law: parties often stipulate in contracts that they will arbitrate, rather than litigate, when disputes arise. For example, unions and employers almost always put an arbitration clause in their formal negotiations, known as collective bargaining agreements. By doing so, they agree to arbitrate any future employee grievances over wages, hours, working conditions, or job security—in essence, they agree not to sue if disagreements occur. Similarly, a purchaser and a provider of services who disagree over the result of a business deal may submit the problem to an arbitrator instead of a court. Mandatory arbitration is a more recent phenomenon. States such as Minnesota, New York, and New Jersey have enacted statutes that force disputes over automobile insurance claims into this forum. In addition, courts sometimes order disputants into arbitration.

In theory, arbitration has many advantages over litigation. Efficiency is perhaps the greatest. Proponents say arbitration is easier, cheaper, and faster. Proponents also point to the greater flexibility with which parties in arbitration can fashion the terms and rules of the process. Furthermore, although arbitrators can be lawyers, they do not need to be. They are often selected for their expertise in a particular area of business, and may be drawn from private practice or from organizations such as the American Arbitration Association (AAA), a national non-profit group founded in 1926. Significantly, arbitrators are freer than judges to make decisions, because they do not have to abide by the principle of stare decisis (the policy of courts to follow principles established by legal precedent) and do not have to give reasons to support their awards (although they are expected to adhere to the Code of Ethics for Arbitrators in Commercial Disputes, established in 1977 by the AAA and the American Bar Association).

These theoretical advantages do not always hold up in practice. Even when efficiency is achieved, some critics argue, the price is a lower quality of justice, and it can be made worse by the difficulty of appealing an award. The charge is frequently made that arbitration only results in "splitting the baby"—dividing awards evenly among the parties. The AAA roundly rejects this claim. Yet even arbitrators agree that as arbitration has become increasingly formal, it sometimes resembles litigation in its complexity. This may not be an inherent problem with the process as much as a result of flawed use of it. Parties may undermine arbitration by acting as lawyers do in a lawsuit: excessively demanding discovery (evidence from the other side), calling witnesses, and filing motions.

Ultimately, the decision to use arbitration cannot be made lightly. Most arbitration is considered binding: parties who agree to arbitration are bound to that agreement and also bound to satisfy any award determined by the arbitrator. Courts in most jurisdictions enforce awards. Moreover, they allow little or no option for appeal, expecting parties who arbitrate to assume the risks of the process. In addition, arbitration is subject to the legal doctrines of Res Judicata and Collateral Estoppel, which together strictly curtail the option of bringing suits based on issues that were or could have been raised initially.

Res judicata means that a final judgment on the merits is conclusive as to the rights of the parties and their privies, and, as to them, operates as an absolute bar to a subsequent action involving the same claim, demand, or Cause of Action.Collateral estoppel means that when an issue of ultimate fact has been determined by a valid judgment, that issue cannot be relitigated between the same parties in future litigation. Thus, often the end is truly in sight at the conclusion of an arbitration hearing and the granting of an award.

The FAA gives only four grounds on which a court may vacate, or overturn, an award: (1) where the award is the result of corruption, Fraud, or undue means; (2) where the arbitrators were evidently partial or corrupt; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing or hear pertinent evidence, or where their misbehavior prejudiced the rights of any party; and (4) where the arbitrators exceeded their powers or imperfectly executed them so that a mutual, final, and definite award was not made. In the 1953 case Wilkov. Swan, 346 U.S. 427, 74 S. Ct. 182, 98 L. Ed. 168, the U.S. Supreme Court suggested, in passing, that an award may be set aside if it is in "mani-fest disregard of the law," and federal courts have sometimes followed this principle. Public policy can also be grounds for vacating, but this recourse is severely limited to well-defined policy based on legal precedent, a rule emphasized by the Supreme Court in the 1987 case United Paperworkers International Union v. Misco, 484U.S. 29, 108 S. Ct. 364, 98 L. Ed. 2d 286.

The growth of arbitration is taken as a healthy sign by many legal commentators. It eases the load on a constantly overworked judicial system, while providing disputants with a relatively informal, inexpensive means to solve their problems. One major boost to arbitration came from the U.S. Supreme Court, which held in 1991 that Age Discrimination claims in employment are arbitrable (Gilmer v. Inter-state/Johnson Lane Corp., 500 U.S. 20, 111 S. Ct. 1647, 114 L. Ed. 2d 26). Writing for the majority, Justice byron r. white concluded that arbitration is as effective as a trial for resolving employment disputes. Gilmer led several major employers to treat all employment claims through binding arbitration, sometimes as a condition of employment.

Arbitration clauses have become a standard feature of many employment contracts. This has led to conflicts concerning the applicability of these clauses when an employee seeks to sue an employer for a Civil Rights violation under Title VII of the Civil Rights Act of 1964, as amended by the civil rights act of 1991. A provision of this law addressed, for the first time, the arbitration of Title VII claims. Section 118 of the act states that the parties could, "where appropriate and to the extent authorized by law," choose to pursue alternative dispute resolution, including arbitration, to resolve their Title VII disputes. Since its enactment, the federal courts have been required to determine what this clause means in practice. For example, in the securities industry disputes arose over whether employers could require their employees to waive their right to bring a Title VII claim in court. The circuit courts of appeal have uniformly ruled that Congress did not mean to preclude compulsory arbitration of Title VII claims.

The Equal Employment Opportunity Commission (EEOC) has contended that employment arbitration clauses do not prohibit the EEOC from filing an action against an employer for a civil rights violation. The Supreme Court agreed in Equal Employment Opportunity Commission v. Waffle House, Inc., 534 U.S. 279, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002), holding that the EEOC could seek damages on behalf of an employee. The commission could also seek injunctive relief to change a company's discriminatory methods. In so ruling, the Court resolved an issue that had divided the circuit courts of appeal.

The employee in question was fired from his job at the Waffle House after he suffered a seizure. He filed a claim with the EEOC, arguing that his rights under Title I of the Americans with Disabilities Act (ADA) had been violated. Under this act, the EEOC has the authority to bring its own enforcement actions against employers and to seek reinstatement, backpay, and compensatory and Punitive Damages on behalf of an employee. Moreover, the ADA makes no exception for arbitration agreements, nor does it even mention arbitration. Therefore, the EEOC, which had not signed an arbitration agreement with the employer, was free to pursue its claims in court. The Court also concluded that the general policies surrounding the ADA, and the EEOC's enforcement arm, justified the pursuit by the EEOC of victim-specific relief. It stated that punitive damages "may often have a greater impact on the behavior of other employers than the threat of an injunction."

The Supreme Court also has validated the enforceability of arbitration awards relating to Collective Bargaining agreements. In Eastern Associated Coal Corporation v. United Mine Workers of American, District 17, 531 U.S. 57, 121S.Ct. 462, 148 L.Ed.2d 354 (2000), the issue involved a labor arbitrator who ordered an employer to reinstate an employee who had twice tested positive for marijuana use. The employer filed a lawsuit in federal court seeking to have the arbitrator's decision vacated, arguing that the award went against a public policy against the operation of dangerous machinery by workers who test positive for drugs.

The Court unanimously agreed that the employee should be reinstated. The Court made it clear that the question was not whether the employee's drug use itself violated public policy, but whether the agreement to reinstate him did so. However, the Court also pointed out that the public policy exception is a narrow one. Based on these principles, the Court ruled that the reinstatement did not violate public policy, as the award did not condone drug use or its impact on public safety. In addition, the arbitrator placed conditions on the employee's reinstatement, which included suspension of work for three months without pay, participation in a substance abuse program, and continued random drug testing. The fact that the employee was a recidivist did not tip the balance in favor of discharge.

Further readings

Crowley, Thomas. 1994. "The Art of Arbitration Advocacy." Hawaii Bar Journal (September).

Culiner, Helen. 1994. "Practical Guidelines for Lawyers Representing Clients in Arbitration Proceedings Today." Dispute Resolution Journal (September).

Deye, James, and Lesly Britton. 1994. "Arbitration by the American Arbitration Association." North Dakota Law Review (spring).

Nolan-Haley, Jacqueline M. 2001. Alternative Dispute Resolution in a Nutshell. 2d ed. St. Paul, Minn.: West Wadsworth.

Ware, Stephen J. 2001. Alternative Dispute Resolution. St. Paul, Minn.: West Wadsworth.

Cross-references

Alternative Dispute Resolution.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

---

arbitration n. a mini-trial, which may be for a lawsuit ready to go to trial, held in an attempt to avoid a court trial and conducted by a person or a panel of people who are not judges. The arbitration may be agreed to by the parties, may be required by a provision in a contract for settling disputes, or may be provided for under statute. To avoid clogged court calendars the parties often agree to have the matter determined by a panel such as one provided by the American Arbitration Association (which has a specific set of rules), a retired judge, some other respected lawyer, or some organization that provides these services. Usually contract-required arbitration may be converted into a legal judgment on petition to the court, unless some party has protested that there has been a gross injustice, collusion or fraud. Many states provide for mandatory arbitration of cases on a non-binding basis in the hope that these "mini-trials" by experienced attorneys will give the parties a clearer picture of the probable result and lead to acceptance of the arbitrator's decision. (See: arbitrator)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.

---

arbitration noun adjudgment, adjustment, appraisal, arbitrage, arbitrium, assessment, decision, decree, determining of a controversy, finding, intercession, interjacence, intermediation, intervention, judgment, rapprochement, resolution,settlement
Associated concepts: advisory arbitration, arbiiration agreement, arbitration and award, arbitration award, arbitration clause, arbitration provision, arbitrators, binding arbitration, compulsory arbitration, grievance arbitration, innerest arbitration, proceeding to confirm arbitration award, voluntary arbitration

---

See also: adjudication, collective bargaining, intercession, mediation, negotiation, reconciliation

Burton's Legal Thesaurus, 4E. Copyright © 2007 by William C. Burton. Used with permission of The McGraw-Hill Companies, Inc.

---

ARBITRATION, practice. A reference and submission of a matter in dispute concerning property, or of a personal wrong, to the decision of one or more persons as arbitrators. 
     2. They are voluntary or compulsory. The voluntary are, 1. Those made by mutual consent, in which the parties select arbitrators, and bind themselves by bond abide by their decision; these are made without any rule of court. 3 Bl. Com. 16. 
     3.-2. Those which are made in a cause depending in court, by a rule of court, before trial; these are arbitrators at common law, and the award is enforced by attachment. Kyd on Awards, 21. 
     4.-3. Those which are made by virtue of the statute, 9& l0 Will. III., c. 15, by which it is agreed to refer a matter in dispute not then in court, to arbitrators, and agree that the submission be made a rule of court, which is enforced as if it had been made a rule of court; Kyd on Aw. 22; there are two other voluntary arbitrations which are peculiar to Pennsylvania. 
     5.-4. The first of these is the arbitration under the act of June 16, 1836, which provides that the parties to, any suit may consent to a rule of court for referring all matters of fact in controversy to referees, reserving all matters of law for the decision of the court, and the report of the referees shall have the effect of a special verdict, which is to be proceeded upon by the court as a special verdict, and either party may have a writ of error to the judgment entered thereupon 
     6.-5. Those by virtue of the act of 1806, which authorizes "any person or persons desirous of settling any dispute or controversy, by themselves, their agents or attorneys, to enter into an agreement in writing, or refer such dispute or controversy to certain persons to be by them mutually chosen; and it shall be the duty of the referees to make out an award and deliver it to the party in whose favor it shall be made, together with the written agreement entered into by the parties; and it shall be the duty of the prothonotary, on the affidavit of a subscribing witness to the agreement, that it was duly executed by the parties, to file the same in his office; and on the agreement being so filed as aforesaid, he shall enter the award on record, which shall be as available in law as an award made under a reference issued by the court, or entered on the docket by the parties." 
     7. Compulsory arbitrations are perhaps confined to Pennsylvania. Either party in a civil suit or action,, or his attorney, may enter at the prothonotary's office a rule of reference, wherein be shall declare his determination to have arbitrators chosen, on a day certain to be mentioned therein, not exceeding thirty days, for the trial of all matters in variance in the suit between the parties. A copy of this rule is served on the opposite party. On the day. appointed they meet at the prothonotary's, and endeavor to agree upon arbitrators; if they cannot, the prothonotary makes out a list on which are inscribed the names of a number of citizens, and the parties alternately strike each one of them from the list, beginning with the plaintiff, until there are but the number agreed upon or fixed by the prothonotary left, who are to be the arbitrators; a time of meeting is then agreed upon or appointed by the prothonotary, when the parties cannot agree, at which time the arbitrators, after being sworn or affirm and equitably to try all matters in variance submitted to them, proceed to bear and decide the case; their award is filed in the office of the prothonotary, and has the effect of a judgment, subject, however, to appeal, which may be entered at any time within twenty days after the filing of such award. Act of 16th June, 1836, Pamphl. p. 715. 
     8. This is somewhat similar to the arbitrations of the Romans; there the praetor selected from a list Of citizens made for the purpose, one or more persons, who were authorized to decide all suits submitted to them, and which had been brought before him; the authority which the proctor gave them conferred on them a public character and their judgments were without appeal Toull. Dr. Civ. Fr. liv. 3, t. 3, ch. 4, n. 820. See generally, Kyd on Awards; Caldwel on Arbitrations; Bac. Ab. h.t.; 1 Salk. R. 69, 70-75; 2 Saund. R. 133, n 7; 2 Sell. Pr. 241; Doct. Pl. 96; 3 Vin. Ab. 40; 3 Bouv. Inst. n. 2482.

A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.