Rocklin Conflict Resolution Inc.
23679 Calabasas Road, Calabasas, CA 91302-1502 310.489.1474
Making Arbitrations “More Appealing” – The Pearson Decision
by David Rocklin
Pursuant to longstanding jurisprudence in California, arbitrators’ decisions have been largely immune to challenges in court,
regardless of whether the arbitrator makes a legal error. As a result, employee and employer arbitration participants have had little
recourse when a decision weighs against them. However, the California Supreme Court issued a ruling on April 26, 2010, in Pearson
Dental Supplies, Inc. v. Superior Court, that has thrown this process into a bit of doubt.
FACTS:
The employer hired underlying plaintiff as a janitor in February 1999. In January 2001, underlying plaintiff signed a dispute resolution
agreement requiring him to arbitrate any disputes that arose out of his employment and required that any such arbitration take place
within one year. Plaintiff was terminated in 2006, and filed suit alleging age discrimination in violation of the Fair Employment and
Housing Act, wrongful termination in violation of public policy, and breach of implied-in-fact contract not to terminate him without good
cause. Motion practice ensued, though it is worth noting that the applicability of the arbitration clause was not raised until February
2007. At that time, the court agreed that the arbitration clause was applicable.
At the arbitration, the arbitrator dismissed plaintiff’s claim on the ground that he’d failed to seek arbitration within one year of
cessation of his employment, as contemplated by the plain language of the agreement. The trial court vacated this result and
reinstated plaintiff’s claim based upon the arbitrator’s having misapplied the statute of limitations pursuant to California law. The
Court of Appeal reversed, recognizing the arbitrator’s error, but holding that a trial court has no power to review an arbitrator’s
decision.
The California Supreme Court has now ruled that where an arbitrator’s error of law results in depriving parties of a hearing on the
merits of an unwaivable statutory employment claim, the award must be vacated despite the power of the arbitrator.
It will be interesting to see how this ruling impacts the employment relationship when the party with superior bargaining power seeks
to enforce an arbitration clause.
by David Rocklin
Pursuant to longstanding jurisprudence in California, arbitrators’ decisions have been largely immune to challenges in court,
regardless of whether the arbitrator makes a legal error. As a result, employee and employer arbitration participants have had little
recourse when a decision weighs against them. However, the California Supreme Court issued a ruling on April 26, 2010, in Pearson
Dental Supplies, Inc. v. Superior Court, that has thrown this process into a bit of doubt.
FACTS:
The employer hired underlying plaintiff as a janitor in February 1999. In January 2001, underlying plaintiff signed a dispute resolution
agreement requiring him to arbitrate any disputes that arose out of his employment and required that any such arbitration take place
within one year. Plaintiff was terminated in 2006, and filed suit alleging age discrimination in violation of the Fair Employment and
Housing Act, wrongful termination in violation of public policy, and breach of implied-in-fact contract not to terminate him without good
cause. Motion practice ensued, though it is worth noting that the applicability of the arbitration clause was not raised until February
2007. At that time, the court agreed that the arbitration clause was applicable.
At the arbitration, the arbitrator dismissed plaintiff’s claim on the ground that he’d failed to seek arbitration within one year of
cessation of his employment, as contemplated by the plain language of the agreement. The trial court vacated this result and
reinstated plaintiff’s claim based upon the arbitrator’s having misapplied the statute of limitations pursuant to California law. The
Court of Appeal reversed, recognizing the arbitrator’s error, but holding that a trial court has no power to review an arbitrator’s
decision.
The California Supreme Court has now ruled that where an arbitrator’s error of law results in depriving parties of a hearing on the
merits of an unwaivable statutory employment claim, the award must be vacated despite the power of the arbitrator.
It will be interesting to see how this ruling impacts the employment relationship when the party with superior bargaining power seeks
to enforce an arbitration clause.
Copyright © 2010 Rocklin Conflict Resolution Inc.