Arbitration compelled in at will contract of employment.
In Hampden Coal, LLC v. Varney, 2018 WL 944159 (W. Va. Feb. 16, 2018), an employee sued his employer and the employer moved to compel arbitration. The employee asserted that the employer gathered all employees together, presented documents for signature and pressured the employees to sign and submit the contract of adhesion which contained an arbitration agreement. The employee sought to assert civil rights and statutory claims in court and the employer sought to compel arbitration.
The arbitration clause provided that the parties agreed to:
submit all past, present or future disputes that arise between us to final and binding arbitration. This means that a neutral arbitrator will decide any legal dispute between us, instead of a judge or jury. The Federal Arbitration Act and the American Arbitration Association’s (“AAA”) National Rules for the Resolution of Employment Disputes, then in effect, govern arbitrations under this Agreement. Hampden Coal and I waive our right to go to court in exchange for this right to arbitration.
The contract further provided that:
all disputes or claims of any kind includ[ing] but  not limited to claims of unlawful discrimination, retaliation or harassment based upon race, national origin, ancestry, disability, religion, sex, age, workers’ compensation claims or history, veteran’s status, or any other unlawful reason, and all other claims relating to employment or termination from employment. This shall also include claims for wages or other compensation due, claims for breach of any contract, tort claims or claims based on public policy. This Agreement does not, however, limit any right to file a charge with or assist any government agency, including the EEOC and the NLRB, or the right to file a claim for workers’ compensation benefits or unemployment insurance compensation; nor does it apply to employment benefit plans regulated by the Employee Retirement Income Security Act.
The contract also set forth the following advisory warning in bold lettering:
This Mutual Arbitration Agreement contains legally binding promises. Please seek legal advice, of your choosing, instead of signing this Agreement if you do not understand or have questions about any part of this Agreement.
The West Virginia Supreme Court applied the “sliding scale” analysis of substantive and procedural unconscionability and ruled that: 1) the contract was not unconscionable; 2) the civil rights and other statutory claims were within the scope of the arbitration agreement, and 3) compelled arbitration.
Ninth Circuit rules that arbitrator under the FAA does not have authority to compel a third party to produce documents unless it is at a hearing. A ruling under the Hawaii RUAA would differ.
In CVS Health Corp. v. Vividus, __ F.3d __, 2017 WL 6519942 (9th Cir. Dec. 21, 2017) the 9th Circuit declared that under section 7, which provides that arbitrator may compel the attendance of a person “to attend before them . . . as a witness,” and to “bring with him” relevant documents, an arbitrator cannot issue a discovery subpoena unless it is in connection with an arbitration hearing. There appears to be a split of jurisdictions on this issue. The 8th Circuit allows the issueance of a subpoena for pre-hearing discovery.
Under Hawaii’s RUAA,Sec. 658A-17, provides the arbitrator with broader authority to “issue subpoenas for the attendance of a witness and for the production of records and other evidence at a discovery proceeding”. (HRS Sec. 658A-17(d)).
Arbitration Award not final and definite.
Under Sec. 10(a)(4) of the FAA, an arbitration award may be vacated if the award rendered is not “mutual, final and definite”. In Norfolk Southern Railway Co. v. Sprint Communications Co., 2018 WL 1004805 (4th Cir. Feb. 22, 2018), (a three person lease appraisal case), a majority of the panel issued a decision which identified two key assumptions that underlay the majority’s decision. One of the signatories to the majority decision stated that if either of the two assumptions “are found to not be true”, [the arbitrator]”reserves the right to withdraw his assent” to the decision. The Fourth Circuit Court found such reservation of right to be inconsistent with the statutory requirement of finality and remanded the case back to the District Court to vacate the award and to return the matter back to arbitration for “an arbitration award that is “final” and otherwise complies with the FAA…”
Practitioner Note: The Hawaii RUAA in Sec. 658 A-23, does not contain the “mutual, final and definite” standard as a listed ground for vacature. It does provide that where the “arbitrator exceeded the arbitrator’s powers“, that is a listed ground for vacature. Arbitrators should strive to provide decisions that are complete, definite and final for the benefit of the parties but query whether the Hawaii Courts would allow, in an appropriate circumstance, a conditional arbitrator’s decision to reserve the ability to rescind or alter an arbitration decision upon the occurrence of a stated condition.
Arbitration Issues Pending in the US Supreme Court:
1. Truck driver independent contractor and the FAA. In Oliveira v. New Prime, Inc., 857 F.3d 7 (May 12, 2017) a truck driver who was hired as an independent contractor filed a class action alleging contract and FLSA and minimum wage violations. The employer sought to compel arbitration. The First Circuit Court held that the FAA exemption of “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” applies to truck drivers hired as independent contractors and refused to compel arbitration. The Court also held that the issue of whether the FAA applied was a threshold issue for the Court to decide and not a question of arbitrability delegated by the arbitration agreement for the arbitrator to decide.
The Supreme Court will address these issues in New Prime, Inc. v. Oliveira, No. 17-340.
2. Waivers of class actions in the collective bargaining context and under the National Labor Relations Act. In the consolidated cases of Ernst & Young, LLP v. Morris, 137 S. Ct. 809 (2017); Epic Systems Corp. v. Lewis, 137 S. Ct. 809 (2017); and National Labor Relations Board v. Murphy Oil USA, Inc., 137 S. Ct. 809 (2017)), the Supreme Court should shortly issue a ruling on this issue where a split of Circuit Court decisions exists.