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Violation of Public Policy Claims Precluded by Labor Arbitration

Posted by Eric Kingsley | Aug 08, 2013 | 0 Comments

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In Wade v. Ports America Management, Inc. decided on August 2, 2013, the Court of Appeal declared that a claim for wrongful termination in violation of public policy was precluded due to the fact that the parties had participated in a labor arbitration pursuant to the governing collective bargaining agreement. This contradicted a prior ruling of the Court of Appeal as it related to the preclusion of Fair Employment and Housing Act claims.

The facts of the case are as follows, plaintiff, an African American male and a longshoreman, was laid off by defendant . He was more senior than some of the workers retained by the company. Wade contended this was a breach of the collective bargaining agreement and a wrongful termination. Included within the grievance, was an allegation of discrimination against minorities. His union initiated a grievance, and eventually, pursuant to the collective bargaining agreement, the parties attended a binding arbitration on the issue of whether his termination was wrongful. The arbitrator found for the defendant. Thereafter, the plaintiff initiated a suit in superior court based on the same facts and circumstances as the arbitration. The defendant moved for summary judgment which was granted, and this appeal followed.

In a line of federal cases, a similar issue was presented under Title VII where a prior labor arbitration was being used to dismiss an action for racial discrimination. In that case the U.S. Supreme Court concluded,
“And, in general, submission of a claim to one forum does not preclude a later submission to another. Moreover, the legislative history of Title VII manifests a congressional intent to allow an individual to pursue independently his rights under both Title VII and other applicable state and federal statutes. . . . In sum, Title VII‟s purpose and procedures strongly suggest that an individual does not forfeit his private cause of action if he first pursues his grievance to final arbitration under the nondiscrimination clause of a collective-bargaining agreement.” Alexander v. Gardner-Denver Co. (1974) 415 U.S. 36, 47-49 [Citations omitted]

The California court extended this rationale to the Fair Employment and Housing Act, in Camargo v. California Portland Cement Co. (2001) 86 Cal.App.4th 995.

The court held that an arbitration award of a FEHA claim under a CBA can be given preclusive effect only if (1) the agreement to arbitrate the FEHA claim in the CBA is clear and unmistakable, and (2) the procedures of the arbitration allow for the full litigation and fair adjudication of the FEHA claim. Because the record showed neither condition had been satisfied, the arbitration award had no preclusive effect. Id., at 1018-1019.

In Wade the plaintiff contended that res judicata should not apply because his primary claim in the union arbitration was discrimination based on union activities not racial discrimination. The Court of Appeal found that even though he did not raise the racial discrimination in the arbitration, he had the opportunity to do so and he should have availed himself of that opportunity. “Thus, appellant could and should have raised the issue of ‘wrongful termination in violation of the public policy against racial discrimination' in the arbitration proceeding.” Wade, at 14.

The takeaway from Wade is clear. If an employee participates in a labor arbitration pursuant to a valid collective bargaining agreement, that plaintiff may forfeit the right to later bring claims (even claims not raised in the arbitration) in court. Make sure you are aware of any labor arbitrations that could affect your case. If the client is in the process of initiating one, or the union is about to proceed, you might want to discuss with the union and the plaintiff which forum is likely to be more favorable for that type of claim. In most cases it would seem the plaintiff would be better off having the union abandon the grievance and pursue the claim in court.

About the Author

Eric Kingsley

In practice since 1996, attorney and firm co-founder Eric B. Kingsley has litigated complex cases and authored numerous appellate briefs in both state and federal court on behalf of the California law firm of Kingsley & Kingsley, including over 150 class actions. Mr. Kingsley concentrates his pra...

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